3.31 NATS has little control over its traffic volumes. Though it is a monopoly its customers have the freedom to vary their use of the service between zero and the maximum volume allowed by safety standards. Monthly year on year traffic growth can be highly variable (see Figure 23). A further adverse trend, prevalent since September 11th, has been for airlines to use smaller aircraft, which cost NATS as much to handle as larger aircraft but attract lower charges.
3.32 To increase its charges above the limits set by the price cap, NATS must apply formally to the Civil Aviation Authority. The review process must follow formal procedures of consultation and consideration as required by the Transport Act 2000 and the rules of Eurocontrol. Practically, this means that the Authority will take several months to respond to requests from the company to consider changes in circumstances. Another constraint is that charges are normally set within Europe only once a year. If the operator and regulator cannot determine the need for an increase before prices are set in late November for the following calendar year, the operator will have to wait a further year. This severely limits the ability of NATS to change its prices in response to changed market circumstances. Following September 11th, NATS applied to the Regulator in February 2002 for a price increase to take effect from January 2003, and the Regulator announced its initial determination in May.