Britain’s state-backed air traffic control operator has insisted its boss deserves a £1.2m bonus because he is not to blame for the chaos inflicted on millions of holidaymakers this summer.
NATS, which is 49pc owned by taxpayers, is standing by the incentive payment to its chief executive Martin Rolfe despite massive disruption and thousands of cancelled flights across the country.
The payment has sparked concern across the aviation industry, with executives warning it risks causing reputational damage at a time of crisis.
One airline executive said: “The scale of the bonus is quite extraordinary and I suspect will make many — including NATS’ own staff — wince.
“After years in which airlines have had to pay significant price increases in the cost of UK air traffic control to cover NATS’ pension deficit — making the UK amongst the most expensive countries in Europe for air traffic control service — it’s distinctly galling to see this.
“It’s the epitome of the old saying that a ‘monopoly is only a bad thing until you’ve got one’.”
The payment is part of a long-term bonus scheme covering the five years from 2015.
It was initially due to be paid out in June 2020, months after the pandemic plunged the aviation industry into its biggest-ever crisis. Mr Rolfe said he would defer it “until a more appropriate time” rather than waiving the amount altogether.
In contrast Luis Gallego, the chief executive of British Airways’ parent company, gave up a £900,000 bonus in 2021 and took a 10pc cut in his basic salary following a backlash from investors.
In addition to the £1.2m eventually coming his way, Mr Rolfe and finance chief Alistair Borthwick took a separate £245,000 in annual incentives for meeting cost and profit targets during the six months to March 2022, according to NATS’ latest financial accounts.
Air navigation service providers (ANSP), many of which are state-owned, are facing a backlash from airlines for increasing fees to recover losses racked up during the pandemic.
The operators’ fees are typically based on the number of flights they manage. And with Covid travel restrictions effectively shutting the skies, revenues dried up but many costs remained.
Willie Walsh, the former British Airways boss and head of airlines lobby group IATA, last year attacked a planned $2.3bn increase in charges by operators around the world as “outrageous” and would stall the airline sector’s recovery.
A spokesman for NATS said that the £1.2m bonus “relates to company performance in the five-year period up to end March 2020”.
He added: “It was contractually payable to Martin Rolfe in tranches starting in the financial year 2020/21 but at his instigation was deferred given the financial challenges the company faced at the time due to the pandemic.
“The travel delays occurred outside the period covered in the annual report and were not caused by a failure of NATS services. Our performance year-to-date is in line with or better than targets agreed with customers and the regulator and are among the best of any Air Navigation Service Provider.”
NATS was previously called National Air Traffic Services. Its largest single shareholder is the Government, which also has a “golden share” that allows it to veto any potential sale. A group of nine airlines and pension funds own 42pc of the business, staff have a 5pc stake and Heathrow airport owns 4pc.
The lucrative awards come amid scrutiny of other taxpayer-backed organisations. Alex Mahon, the chief executive of publicly owned Channel 4, commands a salary of £1.2m meaning she will earn less than Mr Rolfe if he takes the bonus payment.
The spokesman said: “[NATS] has a group of shareholders including the Government but no taxpayers money is used to fund on-going operations. Our operations are funded through charges made to service users, predominantly airlines and airports.
“During the pandemic when revenues fell significantly, the company successfully refinanced avoiding any call on taxpayer funding, outside of government schemes available to all commercial businesses such as furlough.”
Separately, the chief executive of Etihad Airways has piled further pressure on the boss of Heathrow airport over significant disruption.
Tony Douglas, who ran Heathrow until 2007 before switching to Etihad, criticised airport head John Holland-Kaye over claims that disruption at the airport could last another 18 months.
He said: “It’s an awfully long time to put up with a substandard experience, that’s for sure. Maybe he knows something that we don’t in terms of security clearance. [But] I wouldn’t be happy accepting that. In terms of what that would mean to our guest, for sure.
“What I’m saying is I wouldn’t challenge what might sit behind John’s comments other than to say: 18 months is just totally unacceptable.”