Financial News

  • 3 December 2013, 11:44

Air Traffic Deal To Take Off Amid China Row

The company which controls Britain's airspace is to strike a deal with its Chinese counterpart amid an escalating international row about a new flight exclusion zone imposed by Beijing.

Sky News has learnt that National Air Traffic Services (Nats) is poised to sign a memorandum of understanding (MoU) to provide expertise to China's Air Traffic Management Bureau (ATMB).

Richard Deakin, the Nats chief executive, will meet the ATMB's director general later on Monday, as part of a series of bilateral meetings set up during David Cameron's trade mission to China.

The agreement between the two organisations could lead to a commercially-lucrative future partnership, according to people briefed on the discussions.

It comes as Beijing wrestles to address severe capacity constraints in Chinese airspace, with the country's economic growth fuelling a massive surge in flight movements.

Dozens of major international airports are under construction across China as it races to overtake the US as the world's largest economy.

The alliance also coincides with a controversial decision by Beijing to create what it called an Air Defence Identification Zone over the South China Sea, provoking tensions with Japan.

Nats, which recently saw a chunk of its shares taken over by the Universities Superannuation Scheme, a leading UK pension fund, has been expanding its international business, and counts Hong Kong's airports authority among its clients.

The Nats' agreement with the ATMB comes weeks after Airbus, the aircraft manufacturer, signed a similar deal with the Chinese body.

That alliance centres on "modernising the country's Air Traffic Management System and to implement the latest Air Traffic Management (ATM) technologies".

"The MoU signed by Airbus and the ATMB under the Civil Aviation Administration of China (CAAC) focuses on improving air transportation, capacity and efficiency, while contributing to a sustainable future. It will also help in harmonising China's ATM, globally and regionally," Airbus said in September.

In total, more than 120 people are accompanying Mr Cameron on the trip, with the full list revealed by Sky News last week.

Notable delegates on the trip include Richard Scudamore, chief executive of the Premier League, and Ron Dennis, boss of the McLaren sports car and Formula One racing group.

The UK's education and medical technology sectors are well-represented, while FTSE 100 executives include George Weston of Associated British Foods, Richard Solomons of Intercontinental Hotels Group, Royal Dutch Shell chairman Jorma Ollila, London Stock Exchange Group boss Xavier Rolet, Talk Talk's Dido Harding and Peter Sands, the boss of emerging markets bank Standard Chartered.

Sir Andrew Witty, the chief executive of GlaxoSmithKline, is also present despite the company facing massive fines over allegedly corrupt payments to Chinese medical practitioners.

Mr Cameron is said to be planning to lobby Beijing on the pharmaceutical giant's behalf during his visit.

A number of deals have been struck, including health and education partnerships, although Whitehall insiders have expressed scepticism that any major commercial agreements will be announced this week.