View from City Road: Safety in the sky earmarked for sale

Ever since the Government dropped planned spending by the Civil Aviation Authority of pounds 600m on new technology and systems from its forward projections for the PSBR, everyone in the industry has been wondering how on earth this vital new investment is going to be paid for. Now we have an answer. Michael Heseltine, President of the Board of Trade, is going to announce the CAA's privatisation when he unveils the Government's white paper on competitiveness on Monday.

Privatisation of the CAA has been mooted and abandoned on numerous occasions in the past. The unions are fiercely opposed and threaten to strike if the Government dares go ahead. In any case it always seemed beyond the pale to privatise something with such important regulatory functions. The US is about to 'corporatise' its equivalent to the National Air Traffic Control Service - the revenue-earning part of the CAA - so as to free it from government procurement constraints but there is apparently no other national air traffic control system in the world that has been sold to private investors. That said, being first did not stop the Government selling BAA in 1987 or breaking up the water industry into its regulatory and service functions so it could be sold in 1990.

There remains, however, one ever so tiny problem. Although airlines are made to pay for use of air traffic control, under an international convention, any surplus earned has to be handed back; the CAA is as a consequence a non-profit-making organisation. The airlines are keen to see the CAA privatised - if only to ensure that adequate investment is maintained - and to buy shares in it, but quite how this previously insurmountable obstacle is to be overcome is anyone's guess. Presumably all will be revealed on Monday.