NATS-Annual-Report-2015

Annual Report and Accounts 2015 | NATS Holdings Limited
Strategic Report
11
Chief Executive’s
review
I am pleased to report that 2014/15
was a year of good operational and
financial performance on which
to end the regulatory reference
period 2 . I would like to thank NATS
staff for their support in achieving
this outcome.
We handled 2.22 million flights
carrying over 240 million
passengers, maintained our excellent safety record and
outperformed our regulatory service targets for capacity.
Overall, Air Traffic Flow Management (ATFM) delay 3 was 2.4
seconds per flight (2014: 5.5 seconds), which was ten times
better than the European average.
We also enabled a 4.3% reduction in CO 2
per flight in
calendar year 2014, worth around £117m in annual fuel
savings to customers. This exceeded the 4% commitment
we made at the start of Control Period 3 (CP3).
We continued to innovate to enhance our service, with
notable examples including: Time Based Separation (TBS)
which has been used to improve landing rates and reduce
delay when faced with strong headwinds at Heathrow; an
arrivals management tool (XMAN) to reduce holding time
and fuel burn for Heathrow arrivals by slowing aircraft
en route up to 350 miles out; and Direct Route Airspace
(DRA) in two sectors of airspace which offers airlines the
opportunity to flight plan routes that better suit them.
Between now and 2020, a major focus for the
business will be the deployment of new technology and
operational procedures to deliver further safety, capacity,
environmental and efficiency benefits to our stakeholders.
This programme of work is known as Deploying SESAR 4
and we plan to accelerate the delivery of it ahead of the
mandated European requirements.
In parallel, through the Borealis Alliance with eight European
air navigation service providers, we are aiming to extend
the airspace for flight plan direct routing from the eastern
boundary of the North Atlantic to the western boundary of
Russian airspace in the North of Europe. This will provide
significant savings in fuel and CO 2
emissions to customers.
Our profit before tax was £200.3m (2014: £157.5m), which
was £42.8m higher than the previous year. Our underlying
performance remained strong and our results benefited
from far lower exceptional charges for goodwill impairment
and redundancy. The principal factors affecting our
performance are explained in the Financial review and
Review of service line performance sections of this report.
During the year, we secured or renewed UK and overseas
orders worth about £1.1bn. About 30% of this relates to work
we will perform for our Aquila joint venture for its Project
Marshall contract. Awarded by the MOD, Project Marshall
is a £1.5bn 22-year contract to modernise military air
traffic provision and infrastructure at airbases in the UK and
around the world. Progress in other areas is discussed in the
Review of service line performance.
We faced a number of challenges in the year. The RP2
settlement, finalised last year, is even more challenging than
the plan we previously recommended to our customers
during the consultation process; we lost the Gatwick tower
contract to a competitor; and our UK en route service
suffered a technical failure in December 2014. The latter
resulted in air traffic delays as we reduced the number of
aircraft in UK airspace in order to maintain safety. This delay
directly affected around 350 flights with a further 150 flights
cancelled. I very much regret the disruption this caused
to the public and to our customers. The event cost NATS
£0.5m in service incentives.
The UK airport tower contract market is increasingly
competitive. This year, after a competitive tender, Gatwick
airport awarded the ATC contract to a competitor. This was
very disappointing. NATS has provided the service for more
than 30 years and achieved 55 runway movements per
hour, making it the best performing single-runway operation
in the world.
2 The CAA’s regulatory
review for Control Period
3 covered the four
calendar years 2011
to 2014. From January
2012 NERL’s UK en route
service was economically
regulated under the
Single European Sky
performance scheme.
Its first Reference Period
covered the three
calendar years: 2012
to 2014.
3 ATFM or Air Traffic Flow
Management delay
represents the delay
between the last take-off
time requested by an
airline and the take-off
slot which is allocated
when an Air Navigation
Service Provider (ANSP)
applies a flow restriction.
Delay which is directly
attributable to an ANSP
includes staffing, capacity
and systems-related
delay. Delay which is not
directly attributable to an
ANSP, includes weather
at airports and en route,
and delay attributed to
airport infrastructure.
NATS determines its
delay based on those
factors which are
directly attributable
to its activities (i.e.
staffing, capacity and
systems-related)
and has compared its
performance with the
equivalent European
value.
4 Single European Sky ATM
Research Programme
Strategic Report