Steer, in partnership with Helios, was commissioned by the CAA to undertake an assessment of NATS En Route Ltd's (NERL) forward-looking capital programme and operating expenditure efficiency for Reference Period 3 (RP3) under the Single European Sky (SES). The assessment formed part of the CAA’s wider economic regulation of NERL and, in particular, the price control decision for RP3.
How we helped
In carrying out its operating expenditure review, Steer undertook a backward-looking assessment of NERL’s cost performance in RP2, relative to both previous projections of cost and traffic levels, and a forward-looking assessment of the cost projections within NERL’s RP3 business plan. This analysis was supplemented by consultation with stakeholders, including airspace users, staff representatives and NERL itself.
In order to identify potential cost savings, Steer undertook extensive analysis of benchmarks, cost drivers, staff productivity, operational resilience and planned capital investments. This analysis fed into the construction of an ‘efficient operator’ model, which projected a range of possible cost savings.
The assessment of the capital programme undertaken by Helios fed into Steer’s final recommendations.
Successes and outcomes
The cost savings identified by Steer and Helios informed the CAA’s determination on NERL’s allowed level of operating and capital expenditure, which fed into the CAA’s final price control decision.
Steer’s report is available on the CAA website. The CAA’s price control decision is available here.
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