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NATS En Route plc NERL Licence

A list of documents detailing the modifications to the NATS Licence

Under the Transport Act 2000 the Government issued a licence to NATS (En Route) plc (NERL) to provide en route air traffic services in the UK.

The Act gives the CAA the role of economic regulator of NERL. The CAA exercises this role mainly through monitoring and enforcing the conditions in the Licence and through modifications to the Licence. The Licence is available below, as is a descriptive summary of the price control conditions in the Licence:

NERL price controls review 2023 to 2027 (NR23)

In response to the CMA's final report on RP3 and the impact of COVID-19, we are reviewing NERL's regulatory arrangements. The review - NR23 - will take both a backward look at NERL's determination for RP3 in light of the impact of COVID-19, and establish new price controls for NERL's regulated activities for the period 2023 to 2027 inclusive. NR23 encompasses activities previously sometimes referred to as RP3 interim arrangements (RP3I).

Update - December 2021

CAP2306 sets out our request for further information and detail in relation to the operating expenditure, capital expenditure and non-regulatory revenue building blocks to be included in NERL's NR23 business plan, which we expect to be submitted by 7 February 2022.

Update - November 2021

The document covers the following topics:

  • stakeholders' responses to the June 2021 Update (CAP2160), in relation to the 2020-2022 reconciliation review, and our views on these responses;
  • in the appendix, the request for information to NERL, which provides a high-level overview of the information we require to carry out the reconciliation review; and
  • a more detailed description of the evidence that is being sought from NERL as part of its submission for each building block.

Update - June 2021

CAP2160 provides further details in relation to the next NERL price control review (NR23), including:

  • our current view on the timetable;
  • guidance for NERL in developing its business plan and the customer engagement process with airspace users; and
  • the reconciliation review for NERL's revenues for 2020 to 2022.

Responses to CAP2160

Update - August 2021

CAA letter to NERL: further guidance on the approach to the next price control review, NR23

Update - March 2021

Responses to CAP2119

Approach to next price control review - December 2020

Responses to CAP1994

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RP3 UK performance plan – UK final decisions

Exceptional measures for 2022

Decision to modify the price controls for NATS (En Route) Plc's (NERL's) regulated activities under its air traffic services licence for the year 2022, following consultation of CAP2245.

NERL RP3 price control conditions: Exceptional measures for 2022

In October 2021 we consulted on modifications to the price controls for NATS (En Route) Plc's (NERL's) regulated activities under its air traffic services licence for the year 2022. These related mainly to exceptional measures in response to the impact of covid-19 on traffic levels.

Responses to CAP2245

NERL RP3 price controls decision

Decision on licence modifications to NERL's air traffic services to implement the price controls for the period 2020-2022. The modifications implement the CMA's decision, introduce a new licence condition to establish processes and procedures to coordinate airspace modernisation, modifications to improve the clarity of certain obligations in the licence, and guidance relating to NERL's capital expenditure incentives.

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Economic regulation for Reference Period 3 under the Single European Sky (2020-2024)

RP3 UK performance plan - CAA final decisions

The CAA has made its final decisions on the UK RP3 performance plan. These decisions are contained in the documents below. On 10 September 2019, NATS formally advised the CAA that it rejected our decisions in respect of the NERL UK and Oceanic price controls. Consistent with the statutory provisions within the Transport Act, on 19 November 2019 the Civil Aviation Authority referred this to the Competitions and Markets Authority to consider and report in due course.

Responses to CAP1967

Consultancy reports

CAA draft performance plan proposals for consultation

This document sets out for consultation the CAA's proposals for the UK's draft performance plan for Reference Period 3 (2020-2024)

Consultancy reports supporting the CAA's proposals for the UK's RP3 draft performance plan

Responses to consultation document

NERL RP3 Business Plan

RP3 Customer Consultation Working Group

Consultancy Reports

Views on NERL's RP3 Business Plan

Expectations for NERL Revised Business Plan

Business Plan Guidance to NERL for RP3

This document sets out guidance to NERL from the CAA in preparing its Business Plan for Reference Period 3 (2020 to 2024).

This consultation document sought views from interested parties on the Business Plan guidance that should shape the CAA's approach to the future economic regulation of NERL in the period from 2020 to 2024.

Responses to Consultation document

Strategic themes for future regulation of NERL

This discussion documents ought stakeholder views on the CAA's proposed strategic themes for the future regulation of NERL, in order to inform the development of the CAA's approach to the regulation of NERL from 2020.

Responses to discussion document:

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Modifications to Condition 2, introducing a requirement to develop a resilience plan

CAP 1682 - Decision on modifications to Condition 2 of NATS (En Route) plc licence in respect of resilience planning, policy statement on enforcement and resilience plan guidance

Responses to our consultation (CAP 1639):


July 2020 - NERL response to resilience plan assessment
June 2020 - resilience plan assessment - summary report
May 2020 - CAA approval of NERL resilience plan

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Advice to the Secretary of State for Transport on licence duration

Advice to the Secretary of State for Transport on extending the length of the notice provisions for termination in the Air Traffic Services licence.

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NERL capital investment

Response to stakeholders on programmes and projects for engagement incentive August 2021

Letter to stakeholders on programmes and projects for engagement incentive June 2021

Responses

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Modifications to Conditions 10 and 10(a) - Reporting on detailed airspace and technology programmes

Condition 10 of NERL's licence requires it to provide a business plan, service and investment plan and periodic reports. After consultation we modified Condition 10 to require NERL to produce detailed technology and airspace plans for RP2 (2015-19) and outline programmes for RP3 (2020-24) as well. At the same time we removed the requirement for it to produce plans on raising the UK transition altitude (TA) and the implementation of the London Airspace Modernisation Programme (LAMP). Our consultation documents, as well as previous documents relating to Conditions 10 and 10(a) are below:

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Advice to the Secretary of State for Transport on licence duration

Advice to the Secretary of State for Transport on extending the length of the notice provisions for termination in the Air Traffic Services licence.

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UK National Supervisory Authority report on costs exempt for RP2 (2015-19)

As part of the European SES performance scheme - member states can submit reports on costs exempt from cost-sharing. Below is the UK's report for RP2, which includes amounts for variances in Eurocontrol, spectrum and agency costs.

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UK National Supervisory Authority report on costs exempt for RP1 (2012-14)

As part of the European SES performance scheme - member states can submit reports on costs exempt from cost-sharing. Below is the UK's report for RP!, which includes amounts for variances in Eurocontrol, spectrum and agency costs.

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Licence modifications in respect of governance and ring-fencing

In our Ad Hoc Review of NATS-related risks in 2012/13, we found that the current arrangements for governance and ring-fencing may need to be strengthened to ensure that users are adequately protected from risks which arise outside of the regulated business.

We consulted on initial proposals to modify these arrangements, and have now published our decision to modify NERL's licence.

Responses to consultation:

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RP2 2015 - 2019 Price Control Licence Conditions
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Proposals to modify licence conditions
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Licence enforcement guidance & prioritisation principles

In May 2015, after consultation, we published Economic Licensing Enforcement Guidance covering our approach to enforcing the NATS Licence and airport economic licences under the Civil Aviation Act 2012. The guidance outlines the legal framework in which our work fits and informs stakeholders of the enforcement powers we have and how we will use them.

After consultation, we also published prioritisation principles that explain our approach in deciding which pieces of work to take forward in the areas of consumer protection, competition law and economic regulation.

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Link to work on contestability of Terminal Air Navigation Services (TANS)
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Oceanic price control
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Economic regulation for Reference Period 2 under the Single European Sky (2015-2019)

Final UK-Ireland FAB Performance Plan submitted to European Commission

Post-consultation Performance Plan (NSA initial submission to State)

Transcript and presentation from Stakeholder Consultation meeting

Draft performance plan published for consultation

Consultancy reports

London Approach

UK Terminal Air Navigation Services (TANS)

Other

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Links to older price control reviews
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Monitoring and enforcement of the NATS En Route plc (NERL) licence

Reports following Project Palamon’s recommendations

Investigation under Section 34 of the Transport Act 2000: Project Palamon (February 2021)

We undertook an investigation (Project Palamon) under section 34 of the Transport Act 2000 (TA00) to consider alleged contraventions by NERL of certain statutory duties under sections 8(1)(c) and 8(1)(d) of the TA00 and certain licence conditions. This investigation followed complaints by Ryanair and Stansted Airport Limited about air traffic flow management delays experienced by airlines and passengers of Stansted and Luton airports.

In February 2021, we published our final decision (along with Annex 1) in relation to an investigation (Project Palamon) under section 34 of the Transport Act 2000. This investigation follows an earlier investigation conducted by the CAA addressing similar complaints brought by Ryanair and Stansted in 2016 in relation to NERL's performance (Project Oberon).

In our final decision we found that:

  • NERL contravened its statutory and Licence duties and obligations in the period January 2019 to March 2020 in relation to the provision of sufficient staffing resilience in the London Approach Service for users of Stansted and Luton airports; and
  • in relation to the other allegations raised as part of the complaints, including on airspace capacity, coding and discrimination, NERL has not contravened its statutory and Licence duties and obligations.

In making these findings, we took into account the very difficult circumstances faced by the aviation sector and the significant reduction in air traffic volumes, following the impact of the covid-19 pandemic. We also note that forecasts for recovery are highly uncertain and it appears likely it will take some time to reach traffic levels seen in 2018 and 2019. Given these circumstances, we consider it is not appropriate for us to take formal enforcement action, as the circumstances leading to the investigation are not currently occurring. Nonetheless, we make a number of recommendations that we expect NERL (and other stakeholders) to adopt in the future as they plan how to provide a resilient service when demand begins to recover, and in the longer term.

With the final decision we also published:

  • an annex to the final decision summarising the representations we received on the draft decision and setting out the CAA's way forward in response; and
  • non-confidential version of the responses we received to the Draft Decision.
Palamon documents
  • Final Decision (25 February 2021)
  • Final Decision Annex 1: (25 February 2021)
  • Non-Confidential versions of responses received to the Draft Decision (Published 25 February 2021):
  • Draft Decision (17 September 2021)
    • Alongside this Draft Decision, we also published a report on the assessment of NERL delays in the London Approach service by the Performance Review Unit of Eurocontrol. This report was produced at our request in support of the investigation.

Notice to NATS (En Route) plc under section 22(11) of the Transport Act 2000 (September 2020)

Under Conditions 5 and 6 of its licence NERL has to provide regulatory accounts and certain certificates relating to its financial and operational resources and its compliance with certain conditions of its licence by 31 July each year. Because of the uncertainty with traffic forecasts due to the Covid-19 crisis, NERL was unable to provide the accounts or certificates by 31 July 2020. NERL has submitted a plan to us to provide the accounts and certificates by 31 October 2020. On 28 September we served a notice on NERL of the licence breach, but said we do not intend to make a final order in relation of the breach at present.

Investigation under Section 34 of the Transport Act 2000: Project Palamon (October 2018)

We have opened an investigation (project Palamon) under section 34 of the Transport Act 2000 (TA00) to consider alleged contraventions by a licence holder of certain statutory duties under sections 8(1)(c) and 8(1)(d) of the TA00 and certain licence conditions.

At this stage, no assumption should be made about whether there has been any contravention.

Civil Aviation Authority Transport Act 2000 investigation - draft decision (September 2020) 

We have published our draft decision in relation to an investigation (Project Palamon) under section 34 of the Transport Act 2000 (TA00). We have considered alleged contraventions by NATS (En-Route) Plc (“NERL”) of certain statutory duties under the TA00 and certain conditions of its Air Traffic Services Licence. This investigation followed complaints by Ryanair and Stansted Airport Limited (STAL) about air traffic flow management delays experienced by airlines and passengers of Stansted and Luton airports.

This investigation follows an earlier investigation conducted by the CAA addressing similar complaints brought by Ryanair and STAL in 2016 in relation to NERL's performance (Project Oberon).

In our draft decision we provisionally find that:

  • In relation to the provision of sufficient staffing resilience in the London Approach Service to users of Stansted and Luton, NERL has contravened its duties in the period January 2019 to March 2020;
  • In relation to other parts of the investigation, including on airspace capacity, coding and discrimination, NERL has not contravened its duties and obligations.

This is a draft decision and we welcome the views of all stakeholders on our provisional findings by 19 October 2020 (to economicregulation@caa.co.uk). We will consider all the representations we receive carefully and intend to issue a final decision later this year.

In making these provisional findings, we have taken account of the very difficult circumstances faced by the aviation sector and that air traffic volumes have reduced significantly, following the impact of the Covid-19 pandemic.  We also note that forecasts for recovery are highly uncertain and it appears likely it will take some time to reach traffic levels seen in 2018 and 2019. These circumstances suggest that it will not be appropriate to take formal enforcement action, as the circumstances leading to the investigation are not currently occurring. Nonetheless, we make a number of recommendations that we expect NERL (and other stakeholders) to take into account in the future as they plan how to provide a resilient service when demand begins to recover, and in the longer term.

Alongside the draft decision we have also published a report on the assessment of NERL delays in the London Approach service by the Performance Review Unit of Eurocontrol. This report was produced at our request in support of the investigation. 

Notices to NATS (EN Route) plc under section 22(11) of the Transport Act 2000 (September 2018 and November 2019)

In July 2018, NERL submitted regulatory accounts with an audit report that did not comply with Condition 6 of its licence. Changes to audit guidance issued by the Institute of Chartered Accountants in England and Wales have meant that auditors are no longer able to express an opinion that meets the requirement under the Condition. NERL has informed the CAA that it will work with the CAA to modify Condition 6 such that a satisfactory audit report can be obtained. Condition 6 has now been modified. However, before that occurred, NERL submitted regulatory accounts that did not comply with Condition 6 of its licence in June 2019.

NATS (En Route) plc Condition 16 Code of practice (December 2016)

Investigation under Section 34 of the Transport Act 2000: Project Oberon

The CAA investigated an alleged breach of licence conditions by NERL's regarding its operation of the London Approach Service

The CAA found that while flight delays increased in 2016, it did not fail to take all reasonable steps to meet demand or discriminate against any party in delivering the London Approach Service. The CAA has made a number of recommendations to NERL to ensure it improves its contingency planning and the resilience of its operations in the future, and will monitor NERL's implementation and the effectiveness of the recommendations going forward.

Project Oberon recommended that we publish data to provide increased transparency on London Approach service quality. Three Oberon Report Indicators are included: NERL Attributable Delays by London Approach Function; NERL Average Delays per Arrival by London Approach Function; and All NERL Attributable Delays per Arrival into London Airports. We are publishing such data each quarter.

Starting with the indicators to June 2018, the format of the report has changed. As well as graphs and data showing delay attributable to NERL's London Approach service, the report also includes graphs and data showing all delay (including non-NERL attributable delay) for each of the London Approach airports. The report is produced by NERL using data and commentary provided by NERL.

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Competition powers

Information on the CAA's concurrent powers with the Office of Fair Trading under the Competition Act 1998 and part 4 (market investigations) of the Enterprise Act 2002 is available on the  Competition powers page.

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Modifications to Condition 6 - Regulatory accounting requirements
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