European air navigation service providers policy framework
According to ICAO Doc 9587 (2017), the objective of ongoing regulatory evolution is to create an environment in which international air transport may develop and flourish in a stable, efficient and economical manner without compromising safety and security and while respecting social and labour standards. Airline liberalisation/deregulation led to substantial economic and traffic growth. Fu et al. (2010) argue that this happened due to increased competition and efficiency gains. They also suggest that liberalisation allowed airlines to optimise their networks. Liberalisation in the area of airports had a similar effect (Efthymiou et al., 2016). It was ATM reforms that led to ANSPs’ becoming more efficient and cost conscious.
The European ATM reforms, known as SES, were first mentioned in 1999, but the major breakthroughs were in 2004, with the adoption of the first package (SES I), and in 2009, with SES II (Crespo and Fenoulhet, 2011). The second SES legislative package was based on certain key pillars: performance, safety, new technologies and capacity (Crespo and Fenoulhet, 2011).
SES is based on the following four main regulations:
- 1 The framework regulation establishes the European Commission as the regulator for the civil sector and the Single Sky Committee to assist it in its regulatory activities.
- 2 The airspace regulation establishes a single European Upper Information Region and within it organises airspace into functional airspace blocks (FABs).
- 3 The service provision regulation establishes a common licensing system for civil ATM providers.
- 4 The interoperability regulation aims to ensure that systems, equipment and procedures operate seamlessly.
The main target of the scheme is to restructure the European ATC in accordance with the traffic flows, to triple the capacity, improve safety by ten times, reduce the cost of air traffic management by 50 per cent and reduce the environmental impact by 10 per cent (EC, 2013). Thus, the performance in SES focuses on four key performance areas (KPAs):
- 1 Safety
- 2 Capacity
- 3 Cost Efficiency
- 4 Environment
The four KPAs are part of the wider set of 11 ICAO KPAs, which also include efficiency, flexibility, predictability, security, access and equity, interoperability and participation. National supervisory authorities (NSAs) are required to establish national targets and plans to meet the EC goals for the delivery of air traffic services (ATS) (Thompson et al., 2016).
If not the most important then definitely the most discussed area is the KPA cost efficiency. The cost effectiveness of ANSPs is measured by the annual ATM Cost-Effectiveness (ACE) Benchmarking Report conducted by the performance review unit (PRU) of EUROCONTROL. The main indicators taken into consideration are the ATCO-hour productivity and employment costs (PRU, 2018). Grebensek and Magister (2013) suggest that benchmarking methodology favours only the busy ANSPs that serve larger airports with additional composite flight hours, thus making them more productive and financially more cost efficient. Moreover, the report does not include private ANSPs (e.g. ACR) and does not effectively separate the costs of en-route-to-terminal services, an area important when comparing the cost of tower and approach control.
The market structure and market power in ATM affect the performance of SES and the implementation of the regulations. The performance regulation 550/2004 brought a relative liberalisation4 by stating that the issue of certificates shall confer on ANSPs the possibility of offering their services to other ANSPs, airspace users and airports within the European Community. In this way, there is no obligation on choice, and the management of the performance of the service provider is done through an arm’s-length commercial contract.
