New talks to beat down the cost of air traffic sell-off

Taxpayers may have to make do with less than the £800m they were due to receive from the controversial part-privatisation of Air Traffic Control, it was revealed yesterday.

Britain's major airlines, which bid for a 46 per cent share of National Air Traffic Services (Nats), have resumed talks with the Government in an attempt to beat down the price. The fresh negotiations mean the new regime at Nats has been postponed to August.

Directors of the airlines, including British Airways and Virgin, are arguing that they may have bid too much for their stake because the growth in air traffic has not been achieved.

There is also concern that the new air traffic control centre will not be ready in time.

Some City sources are also concerned that the airlines may have under-estimated their liabilities under the Nats pension scheme.

News that the Exchequer could receive less than it expected will anger opponents of the part-privatisation, who argued that the sell-off would undermine the safety and that the financial return to the state was far too small to justify the sale.It is thought that ministers will resist reopening the bidding to allow unsuccessful consortiums a second chance because of the political embarrassment it would cause.

Some observers believe the airlineshave paid too much for the shares in their attempt to outbid the rival consortium led by Serco, the management utilities group.

Airline representatives have promised to invest £1bn in Nats over 10 years to keep pace with the expected growth in flights, although the downturn in the global economy might mean that the figure will be capped.

The airlines group triumphed in the bidding process amid threats of strike action by air traffic controllers who were concerned about safety if Serco bought in to the system.

Colin Chisholm, chief executive of Nats, confirmed that the deal had been delayed because of the "size and complexity'' of the transaction, but he insisted that the principles of the agreement had been settled. Both the Department of Transport and the airlines group said they were confident that the details would be worked out by the beginning of August.