NATS lost Single Sky opportunity in DFS rejection

The UK pension fund’s victory over German air traffic control agency in the race for a 20 per cent stake in its British counterpart meant Europe lost its best hope for achieving consolidation of airspace and ATC facilities for the Single European Sky, writes Bob Poole in his latest Reason Foundation newsletter.
The Universities Superannuation Scheme (USS), Britain’s second-largest pension plan, was unveiled earlier this year as the preferred bidder. It managed to beat off Deutsche Flugsicherung (DFS), the state-owned air traffic controller even though it is understood to have submitted a higher bid and had given undertakings not to seek control of NATS
While DFS had been tipped as favourite as it offered the opportunity to deliver big cost savings through the rationalisation of busy European airspace, it is thought that DFS was undermined by opposition from some airlines as well as NATS management.
“The Airline Group, which had owned 42 per cent of NATS prior to the sale, ended up choosing USS rather than NATS to buy a portion of its stake,” writes Poole. “And that meant that a partial de-facto merger between two of the largest European ANSPs did not happen.”
“Whether that would have been a productive merger is somewhat beside the point. Shared ownership between DFS and NATS would have marginally moved forward the struggling European Commission plan to restructure European airspace into nine Functional Airspace Blocks (FABs) with streamlined airspace and fewer costly en-route centres,” said Poole. “That’s because the UK-Ireland FAB shares a border with FABEC, the large FAB that includes Germany and France. But we have yet to see cross-border facility consolidation even within a single FAB, not even the two-country UK-Ireland one.”
“Yet as I have pointed out, the best hope for achieving the consolidation of airspace and ATC facilities for the Single European Sky is mergers and acquisitions among ANSPs,” Poole writes. “The fact is that both part-privatised NATS and government-corporation DFS have succeeded in consolidating en-route centres within their borders, since each has considerable commercial freedom. So if governments were persuaded (or required by the European Commission) to allow cross-border merger and acquisition activity, it’s at least conceivable that the merged ANSP would be better positioned both to rationalise the shared airspace and to replace excessive centres with a smaller number of high-tech ones tailored to the revamped airspace.”
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