UK aviation strategy
The DfT published its draft policy framework for aviation in July 2012 . Its strategy focuses on more frequent flights to emerging markets , improved access to airports and a reduction of the impact of airports on local communities . The final policy framework is due for publication in July 2013 .
Of particular relevance to NATS is support for the SES programme . To this end NATS is in the early stages of developing the airspace design which will deliver the Future Airspace Strategy published by the CAA in 2011 , though any changes to airspace rely on clear environmental parameters being established by the aviation policy framework .
We are also contributing to the Airports Commission ’ s review of options for ensuring appropriate hub capacity in the UK . It expects to publish an initial report later in the year that will include interim measures to address South-East airspace capacity pending development of a future hub strategy .
People
Our people are committed and professional at what they do . Our strategic objective is to have a motivated and competent workforce , proud of their contribution to NATS ’ success in delivering an excellent performance to customers : people valued and adding value .
The successful delivery of a safe and efficient air traffic service during the Olympic period is a testament to the professionalism of our front line operational staff and engineers and those supporting them . I would like to take this opportunity to congratulate and thank everyone involved in NATS and in our partners who contributed in the planning and execution of the Games service .
Our employees have faced other challenges this year too in the form of pension changes . Like many other UK defined benefit schemes , the fall in real gilt yields in recent years to record low levels has had the effect of significantly increasing the liabilities of NATS ’ defined benefit scheme but without a corresponding increase in scheme assets ( two thirds of which are equities and similar return-seeking assets ).
As a result , it was clear that NATS would be facing a material increase in pension contributions after the actuarial valuation at 31 December 2012 unless changes were made . Through Working Together with NATS ’ trades unions staff were balloted on , and agreed , to reduce the existing limit on the annual rate of increase in pensionable pay and to recommend to the scheme ’ s Trustees that future service benefits should be indexed at CPI ( rather than RPI ). When these changes were reflected alongside the Trustees ’ assumptions for the 2012 valuation the deficit was £ 382.6m ( compared with £ 351.1m in 2009 ) and contributions were set at a more affordable level .
Staff also agreed to a 3-year pay award closely linked to CPI which provides certainty to them and the company alike . The company will also introduce from 2014 a Company Performance Related Pay Scheme which directly links the company ’ s profit performance and the value of an employee ’ s total rewards .
In order to achieve the cost efficiency targets we expect in RP2 we will have to reduce our headcount , and we announced a voluntary redundancy scheme to staff in May 2013 . Crucially , to achieve the level of savings necessary , this will require staff reductions within our economically regulated business including operational front line staff . This will be challenging and will require excellent engagement , careful resource planning , focused staff development and positive and constructive industrial relations through Working Together with trades unions .
Business and financial review 27