EC making ANSPs reduce costs
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Size matters too
The "Size Matters" Argument in Air Traffic Control
Article from the current issue of ATC Newsletter from the Reason Foundation:
In a Viewpoint column in the April 21st issue of Aviation Week, the NBAA's Ed Bolen argued that the Nav Canada business model "isn't scalable" because its system is only one-tenth the size of the U.S. air traffic system. And, for good measure, he repeated the point regarding the corporatized systems of Australia, New Zealand, and the U.K.
This has always been a bogus argument. If one kind of funding model—airspace users paying their air navigation service provider directly for services received, rather than paying a tax into a politicized funding allocation system—is demonstrably better and more sustainable, that model should be applicable to ANSPs over a wide range of sizes. Similarly, if one kind of governance model—a corporate form governed by a board of directors representing all the key stakeholders—is demonstrably better than a government agency accountable to numerous overseers, none of whom specializes in aviation, then that, too, should be independent of size and scale.
But these points are even more compelling when we take into account the large economies of scale that exist in the provision of air traffic management. That fact underlies the overall difference in cost-effectiveness between air traffic control in Europe and the United States, and is one of the prime driving forces for creation of a Single European Sky. The November 2013 report from Eurocontrol's Performance Review Commission comparing ATC in Europe and the United States (2012 data) reveals the following:
Europe
United States
Geographicarea (km2)
11.5
10.4
ANSPs
37
1
En-route Centers
63
20
Total staffed facilities
756
696
Controllers
17,700
15,930
Total staff
58,000
38,130
IFR flights (M)
9.5
15.2
IFR flight hours (M)
14.2
22.4
ATC cost (B)
$11.27
$10.45
From these numbers, it is easy to derive two key performance indicators. Cost per IFR flight hour averages $794 in Europe versus $467 in the United States. And annual IFR flight hours per controller are 802 in Europe versus 1406 in the United States. Clearly, the U.S. system delivers far more bang for the buck than the fragmented system in Europe. That reflects significant economies of scale.
But it gets even more interesting when we turn to the latest Global Air Navigation Services Performance Report 2013, produced by CANSO, likewise covering 2012. Although only 23 of CANSO's 84 full members (i.e., functioning ANSPs) provided complete data, the results on the above two key performance measures, by country, are revealing. For this article, I am using data from only the six reporting ANSPs from developed countries. And due to some differences in terminology, the numbers in the CANSO report are not identical with those in the Eurocontrol report. But here are the 2012 numbers for six developed country ANSPs in the CANSO report:
Cost/IFR flight hour
IFR flight hours/ controller
Nav Canada
$339
1739
Airways New Zealand
$431
697
FAA ATO
$454
1729
Nav Portugal
$565
1434
Finavia
$702
620
Naviair
$741
1033
As you can see, despite their smaller size (and hence less economies of scale to take advantage of), both Nav Canada and Airways NZ are delivering first-rate air traffic services at a lower cost per flight hour than the FAA's ATO (with its large economies of scale). Nav Canada is also delivering slightly more flight hours per controller than the ATO. The other three have both much smaller airspace and lower flight activity, hence less potential economies of scale.
My take-away from this is that the cost-effectiveness and productivity of the ATO—already high—could be even higher if it were reorganized as a self-supporting ANSP, with de-politicized funding and governance.
Article from the current issue of ATC Newsletter from the Reason Foundation:
In a Viewpoint column in the April 21st issue of Aviation Week, the NBAA's Ed Bolen argued that the Nav Canada business model "isn't scalable" because its system is only one-tenth the size of the U.S. air traffic system. And, for good measure, he repeated the point regarding the corporatized systems of Australia, New Zealand, and the U.K.
This has always been a bogus argument. If one kind of funding model—airspace users paying their air navigation service provider directly for services received, rather than paying a tax into a politicized funding allocation system—is demonstrably better and more sustainable, that model should be applicable to ANSPs over a wide range of sizes. Similarly, if one kind of governance model—a corporate form governed by a board of directors representing all the key stakeholders—is demonstrably better than a government agency accountable to numerous overseers, none of whom specializes in aviation, then that, too, should be independent of size and scale.
But these points are even more compelling when we take into account the large economies of scale that exist in the provision of air traffic management. That fact underlies the overall difference in cost-effectiveness between air traffic control in Europe and the United States, and is one of the prime driving forces for creation of a Single European Sky. The November 2013 report from Eurocontrol's Performance Review Commission comparing ATC in Europe and the United States (2012 data) reveals the following:
Europe
United States
Geographicarea (km2)
11.5
10.4
ANSPs
37
1
En-route Centers
63
20
Total staffed facilities
756
696
Controllers
17,700
15,930
Total staff
58,000
38,130
IFR flights (M)
9.5
15.2
IFR flight hours (M)
14.2
22.4
ATC cost (B)
$11.27
$10.45
From these numbers, it is easy to derive two key performance indicators. Cost per IFR flight hour averages $794 in Europe versus $467 in the United States. And annual IFR flight hours per controller are 802 in Europe versus 1406 in the United States. Clearly, the U.S. system delivers far more bang for the buck than the fragmented system in Europe. That reflects significant economies of scale.
But it gets even more interesting when we turn to the latest Global Air Navigation Services Performance Report 2013, produced by CANSO, likewise covering 2012. Although only 23 of CANSO's 84 full members (i.e., functioning ANSPs) provided complete data, the results on the above two key performance measures, by country, are revealing. For this article, I am using data from only the six reporting ANSPs from developed countries. And due to some differences in terminology, the numbers in the CANSO report are not identical with those in the Eurocontrol report. But here are the 2012 numbers for six developed country ANSPs in the CANSO report:
Cost/IFR flight hour
IFR flight hours/ controller
Nav Canada
$339
1739
Airways New Zealand
$431
697
FAA ATO
$454
1729
Nav Portugal
$565
1434
Finavia
$702
620
Naviair
$741
1033
As you can see, despite their smaller size (and hence less economies of scale to take advantage of), both Nav Canada and Airways NZ are delivering first-rate air traffic services at a lower cost per flight hour than the FAA's ATO (with its large economies of scale). Nav Canada is also delivering slightly more flight hours per controller than the ATO. The other three have both much smaller airspace and lower flight activity, hence less potential economies of scale.
My take-away from this is that the cost-effectiveness and productivity of the ATO—already high—could be even higher if it were reorganized as a self-supporting ANSP, with de-politicized funding and governance.
Join Date: Aug 2010
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A long time ago I seem to recall NATS was privatised on a not for profit basis.
During the Barron years the not for profit basis was dispensed with and now NATS makes handsome profits every year for the government and The Airline Group.
The Airline Group wants NATS to make a good profit.
The overwhelming majority of the airlines are not part of The Airline Group so they view the annual profits NATS makes in an entirely different light.
The Airlines want NATS to reduce their costs.
The question is how does NATS reduce its costs; do they cut staff and investment or do they cut the profits they make for the government and The Airline Group.
During the Barron years the not for profit basis was dispensed with and now NATS makes handsome profits every year for the government and The Airline Group.
The Airline Group wants NATS to make a good profit.
The overwhelming majority of the airlines are not part of The Airline Group so they view the annual profits NATS makes in an entirely different light.
The Airlines want NATS to reduce their costs.
The question is how does NATS reduce its costs; do they cut staff and investment or do they cut the profits they make for the government and The Airline Group.
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Beef
Zooker, if it's meat you want look here:
http://www.eurocontrol.int/sites/def...t-PRR-2013.pdf
This sets out the legal basis why charges must fall (governments have agreed to the plan several years ago) and provides details of actual Performance versus plan.
FF
http://www.eurocontrol.int/sites/def...t-PRR-2013.pdf
This sets out the legal basis why charges must fall (governments have agreed to the plan several years ago) and provides details of actual Performance versus plan.
FF
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NATS reports record environmental savings
That makes the airlines response even more infuriating, IMO
That makes the airlines response even more infuriating, IMO
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There's an enemy within and there's an enemy without.There is certainly a lot we could do to help ourselves resist the former....though heavens forbid that any ATCO stop earning his desperately needed overtime money😳.
As for the latter,how much are you willing to compromise your principles and pride in the second to none service we give whilst still taking that money? (And weakening at the knees everytime there is a voting opportunity to show some solidarity and defiance....oh,hang on that's not our fault that's the unions fault)
As for the latter,how much are you willing to compromise your principles and pride in the second to none service we give whilst still taking that money? (And weakening at the knees everytime there is a voting opportunity to show some solidarity and defiance....oh,hang on that's not our fault that's the unions fault)
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I met the 'environmental guru' once…
"Where do you work?'
Er, Southampton.
"And where is your home address?"
Er, Oxford.
"So you commute everyday from Oxford to Southampton, producing CO2?"
Er, Yes, but I drive a Mini.
: ok:
"Where do you work?'
Er, Southampton.
"And where is your home address?"
Er, Oxford.
"So you commute everyday from Oxford to Southampton, producing CO2?"
Er, Yes, but I drive a Mini.
: ok:
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Oh dear!
For an airline , charges matter a lot, despite all the good work done by the operational staff, this kind of thing does the ANSP reputation no good whatsoever:
http://www.atn.aero/article.pl?mcate...342D30362D3036
http://www.atn.aero/article.pl?mcate...342D30362D3036
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Perhaps all ANSPs should be obliged to cover pension costs rather than them being met by the government at some time in the future. This might lead to a meaningful cost comparison being possible, and the airlines, sorry, customers, being faced with actual costs rather than effectively nationally subsidised rates.
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121.375,
admittedly it was a while ago, it was an encounter the memory of which I treasure. I seem to remember he arrived on our unit with a very large laminated-plastic cut-out of a purple foot, accompanied by a similar model in green.
admittedly it was a while ago, it was an encounter the memory of which I treasure. I seem to remember he arrived on our unit with a very large laminated-plastic cut-out of a purple foot, accompanied by a similar model in green.
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This pension funding argument is being used by some to muddy the waters of ANSP charges.
Government owned ANSPs are not generally run as businesses. Privately owned ANSPs are run as businesses.
A business should generate enough profits to cover their costs such as pensions.
It seems to me some businesses want retain all their profit for their shareholders and for their customers to stump up for their pension costs with pass through.
I can fully understand the airlines position. They want lower charges. They always will. They see ANSPs making huge profits and they wonder why those profits are not going to pay the pension liabilities.
Government owned ANSPs are not generally run as businesses. Privately owned ANSPs are run as businesses.
A business should generate enough profits to cover their costs such as pensions.
It seems to me some businesses want retain all their profit for their shareholders and for their customers to stump up for their pension costs with pass through.
I can fully understand the airlines position. They want lower charges. They always will. They see ANSPs making huge profits and they wonder why those profits are not going to pay the pension liabilities.
