IATA is more unhappy with ATC providers than with airports over charges, particularly those in Europe. According to director general Pierre Jeanniot, some "have decided that their services are an irreducible cost, and are not ready to make any attempt to reduce that cost." He points to the ATC providers of Belgium (24% rise), Germany (16%), the Netherlands (12%) and Spain (20%), as the worst offenders for proposing fee hikes.

Alexander ter Kuile, secretary general of the Civil Air Navigation Services Organisation (CANSO), defends the industry, saying it is caught "between a rock and a hard place". In Europe, most providers operate on the cost-recovery principle, through which whatever costs are incurred are turned into the charging rate.

Since they are pure cash-flow operations, with little reserves and only limited ability to cut operational costs, when revenue eventually dries up, an adjustment needs to be made immediately, ter Kuile says.

Although he admits some providers are not great examples of efficiency, others have done everything in their power to cut costs. For example, the UK's National Air Traffic Services has accelerated a staff reduction programme and deferred some expenditure, while IATA praises the Irish Aviation Authority and Nav Canada for their efforts to reduce costs.

For CANSO's ter Kuile this issue highlights a structural problem for the industry. He believes the financial structure of providers may need reviewing, creating a system which falls short of privatisation but is at least one which offers providers financial incentives to be more efficient and make cost reductions. "The cost recovery principle is a financial instrument where there is no room for us to manoeuvre, "he says.

Source: Airline Business