Nats Rescue Threatened by Ryanair

By Hirst, Clayton | The Independent on Sunday (London, England), December 8, 2002 | Go to article overview
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Nats Rescue Threatened by Ryanair


Hirst, Clayton, The Independent on Sunday (London, England)


No-frills airline Ryanair is preparing to challenge the Government's bailout of the cash-strapped National Air Traffic Services in the courts.

Europe's second-largest budget operator, headed by Michael O'Leary, is to meet the Civil Aviation Authority (CAA) on Wednesday to spell out the grounds for a legal challenge under European competition law.

The rescue of Nats, which was part-privatised in March 2001, involves a pounds 60m cash injection by airports operator BAA to be matched pound-for- pound by the Government. On top of this, the CAA has agreed to allow Nats to increase the charges it levies on the airlines.

Nats is 46 per cent owned by the Airline Group, whose shareholders include BA, Virgin Atlantic, easyJet and BMI.

In a letter sent to the CAA, seen by The Independent on Sunday, Ryanair says: "This is not only unfair but is, on the face of it, illegal."

Dated 28 November, the letter adds that the airlines which are not shareholders in Nats "are being discriminated against because we will not receive any return on this forced investment, whereas the Airline Group and other shareholders will". The letter concludes that unless the bailout is abandoned then legal action is likely.

Jim Callaghan, Ryanair's head of regulatory affairs, said: "The proposals have to be challenged in order for things to be fair and equitable. We'll get no financial return for the 8 per cent increase in fees and the forced investment we are expected to make in Nats."

Mr Callaghan refused to reveal details of the legal action. However, it is understood Ryanair believes that Nats' rescue infringes Article 86(2) of the European Union Treaty, covering competition.

Mr Callaghan also criticised others for not taking up the issue. "The airlines which are not shareholders in the Airline Group have not been vocal. I think that this is because so many of them have links with the shareholders of Airline Group. In my opinion, it's all stitched up through co-sharing agreements between the airlines," he said.

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