Examination of witnesses (Questions 280-299)
MR RICHARD EVERITT AND MR COLIN CHISHOLM
TUESDAY 11 JUNE 2002
280. Are they trying to secure any understandings that their investment would be in return for other benefits?
(Mr Everitt) Not with us, no. They have made it very clear that the rationale for their investment is the importance of a stable NATS to them as major airport operators.
281. How is the relationship with SERCO in all this?
(Mr Everitt) SERCO did indicate publicly that they did not wish to pursue their interest and they had indicated an interest in a further investment in NATS.
282. In terms of them having been a bidder originally for the air traffic control and given the amount of subsidy that there has been subsequently given, the grants that have been given, is it possible that they would pursue what I understand is a possible suing of the Government?
(Mr Everitt) I do not think so. I have certainly had no indication of that. I do not quite understand your reference to grants being given.
283. In terms of the price that they were willing to pay for the air traffic control against that as offered by the Airline Group the figure is now levelling itself out to a point where it is almost a negative as far as the Airline Group bid was concerned and in these circumstances having bid less than SERCO had SERCO would have a case to connect with the Government and ask that consideration be given to the whole set of the circumstances that you are now facing.
(Mr Everitt) Both bids would have faced the same downturn in revenue that we are facing at the moment. I do not think you can make the assumption that you have made, and certainly I have no indication that SERCO have any interest in this at all.
284. So you would not presume that they would consider reapproaching the Government on this?
(Mr Everitt) I have to say I think it is a matter for them and it is nothing that I could usefully comment on.
285. Can you give us some indication as there was some press speculation, and it may well just be speculation, as far as the insurance policy for NATS is concerned.
(Mr Everitt) Quite easily. Frankly, every business in aviation is facing insurance premium increases, third party liability insurance premium increases, following September. We are no different. In fact, our increase in percentage terms is broadly the same as the airlines because we have actually checked with a couple of airlines, I think we are slightly less. We are talking of a sum of around £200,000 a year so it is not material in the context of our finances.
286. Since we last took evidence from you in terms of the computer and the failures there have been, have you now got an update in terms of the cause of those?
(Mr Everitt) We certainly understand the issue so far as the flight data processor at West Drayton is concerned and I think I explained to the Committee that we had put a patch in. We have subsequently had the problem on 17 May and perhaps, Colin, you would like to talk about that.
287. Mr Chisholm, do you want to tell us about 17 May?
(Mr Chisholm) Thank you, Chairman. The failure on 17 May was a failure of the Swanwick system as opposed to the LATCC system at West Drayton, which the previous ones were. We had a problem with a particular work station after what is called a download and cut over when we were doing a routine database upgrade and we move out of the ops room and move back into it. As we move back in we switch the work stations on. In the process of doing that one particular work station developed a communications fault with the rest of the network and the servers. That, in combination with some other problems, and they are rather detailed technical problems, I can go into them if you want, caused us not to be able to split the sectors. So in nighttime configuration we are operating about eight sector combinations and we split that out as the morning builds up to 19 or 22 sectors depending on the time of day, etc. We were unable to do that because of this communications problem on one work station. It was a combination of problems that we had not seen before and we were really very, very unlucky that we got that particular combination. We have analysed that fault, we understand it, we have put in place some fixes so that we can see the fault arising, if it does, and a procedure to correct it. We would anticipate that there is a very, very low risk of a reoccurrence of that and we know how to fix it if it did happen.
288. Can you give us a guarantee that the long-term robustness of the system will not lead to a similar situation in the immediate future?
(Mr Chisholm) I guess that nobody can ever give guarantees about complex system robustness or failures but I think I could come pretty close to a guarantee that if we hit that particular fault again we would recover from it very quickly and we have got a procedure to correct it. In terms of the wider robustness of the system, the Swanwick system has been running for five months now and this is the first serious system failure. I think that is a pretty good record for a highly complex modern system and I would expect the track record of Swanwick to get steadily better from here on in.
289. So what role would the air traffic control assistants play in a situation like that if it occurred again where you have to revert to manual operations following the computer failure? What would be their role in that?
(Mr Chisholm) In manual operation the assistants have additional duties in terms of the production of flight data, some of which has to be hand prepared as opposed to automatically prepared, and the distribution of that data. There may also be some additional telephoning for interchange of estimates, etc., to adjacent centres.
290. So in these circumstances would it be sensible in the programme you have to reduce the numbers from the present 1,144 down to 866 by 2006? Is that a programme that is still continuing given that you have had these problems? Is that a sensible solution at this stage to have a downsizing of that nature?
(Mr Chisholm) I think that at every stage that one looks at downsizing linked to technology, and those particular downsizing events would be linked to technology, you have to be sure that your technology has reached the stage where it is sufficiently robust and such instances of system failure would be very, very rare and when they occurred you would still have an adequate manual fallback. You can have other fallbacks that involve an alternative data production and that is a possibility. I think the real answer is if we are not sufficiently convinced that these types of events are very rare, or if we are not convinced that we have an adequate fallback without those assistants, then we will not be able to remove those assistants.
291. The programme starts from this year, you are taking out 130 over the next 12 months. Is that figure still on for that reduction to take place or because of the problems that you have had with the computer are these figures less likely to be delivered? If that is the case what will be the implications to be able to manage the system within the budgets that you have prepared?
(Mr Chisholm) I would have to check your figure of 130 assistants over the next 12 months.
292. My arithmetic is not always the best but it goes from 1,144 to 1,016 which is 128 to be exact.
(Mr Chisholm) But those assistants are not coming out of Swanwick in the next 12 months.
293. They are not? Where are they coming from?
(Mr Chisholm) Not in the next 12 months.
(Mr Everitt) I think those numbers may take account of the Swanwick numbers where assistants went after West Drayton.
294. The point, however, is a serious one, Mr Chisholm. They may not all be from Swanwick but the point is that if you are forced to revert to a manual system how are you going to do that if you have managed to downsize, to use the fashionable phrase, those people who normally do that task?
(Mr Chisholm) As I say, I do not believe we could do that unless the technology was robust enough that it was a very, very rare event and we had alternative means of reverting to manual without those individuals.
295. Which you do not have at the moment.
(Mr Chisholm) Right now we do not have either of those things.
296. The figures that were supplied in terms of the supplementary to the memorandum that we received give a planned reduction in the number of air traffic assistants, from your company secretary this is, Andrew Picton, making it that there would be reduction in this year. If you have got these computer failures it does not seem sensible in these circumstances to be maintaining that trend, does it?
(Mr Chisholm) We use assistants right across the country. We reduced the number of assistants in moving to Swanwick and I think part of those figures will perhaps have an element of that. We also use assistants not only for flight data production but also that grade is used as what are called ACPOs, they are pseudo pilots in our training environments. We used a very large number of them, many on fixed term contracts, short-term contracts, in the transition training for Swanwick and we do not have the same need for that number of people. You must not interpret those numbers as necessarily being assistants who are working in the ops room at Swanwick.
297. So in terms of computer failures themselves, you are not in a position to tell us when the next failure will be statistically or otherwise, you are not in a position to know what the probability will be of any crash in this computer system itself, you are not going to continue the trends or you are not giving any indication to us whether or not you are continuing the trends of downsizing, a modern term. In these circumstances how are you going to meet your budgets? That is fundamental on this.
(Mr Chisholm) We are going to continue. We are trying to develop the Swanwick system so that the technology is extremely robust and move progressively to electronic data and as we do that we have got to make sure the fallbacks are either such that the systems will fail very, very rarely and we and the customers will take the hit when they do, or that we have got alternative means of fallback that do not involve those numbers of people. What we will do over the coming years is we will work progressively on those things.
298. Mr Everitt, you talked about £50 million to £65 million worth of investment, possibly from BAA.
(Mr Everitt) Yes.
299. And matched funding from Government of potentially the same. When you gave evidence to us before you were talking about £50 million, again matched by Government. That would imply that the requirement for capital has now extended since we last met. Is that the case?
(Mr Everitt) I do not think it would be right to make that implication. Clearly what we are trying to do is build as robust a balance sheet as we can. We have managed to negotiate with BAA on the basis of a sum between £50 million and £65 million. If we can make the case for £65 million and we can persuade the Government that £65 million is the right number then I think it just adds a wee bit more strength to our balance sheet than if we took £100 million or if we secured £100 million.