Graham Lake, former director general of air traffic management trade body CANSO, examines why the immediate financial choices facing air navigation service providers are destined to have a direct impact on airline operations and passenger services for years to come
Many of the world’s Air Navigation Service Providers (ANSP’s) are facing a collapse in traffic and revenues as a result of the Covid pandemic.
To make matters more complicated, ANSP’s are in the midst of implementing the ICAO Global Air Navigation Plan (GANP) agreed by governments and designed to increase capacity, safety, efficiency and environmental performance.
The Single European Sky (SES) launched in 2004 and now effectively the European regional version of the GANP also includes investment obligations associated with the SES charging scheme.
In Europe, falls in ANSP revenue are set against the background of a sustained period of traffic growth that has resulted in positive returns for ANSPs and steady reduction in their user charges over the past five years.
An important feature that has now been brought into focus, is the Traffic Risk Sharing (TRS) formula, which shares the risks of large variations in traffic between ANSPs and airspace users. This will reverse the trend of reducing user charges.
Without urgent government action, airlines face the prospect of substantially increased ANSP charges from 2022, while ANSP’s face catastrophic revenue shortfalls in the near term. The decisions taken to address these challenges will have long term consequences for air transport.
Crisis will have lasting impact on traffic levels
The chances of a return to pre-pandemic traffic levels for ANSP’s are slim. Changes in travel habits are likely for some time, with reduced demand for travel according to IATA, until 2024 or beyond.
History has shown that when compared to airlines and many airports, the impact for ANSP’s of past crisis events has had a longer-term effect. For instance, a full decade after 9/11, the number of flights using US airspace had not recovered to the levels seen prior to 2001. Similarly, across Europe, the annual number of flights seen in 2007, before the global financial crisis, did not fully return until 2017.
If this pandemic has a similar impact (IATA believes it will be worse), by 2030, Europe could very well be handling airspace demand levels no greater than those seen 20 years beforehand, potentially undermining justifications for airspace capacity investments.
Cost cuts and strategy decisions made by ANSP’s, airlines and airports, as a result of the global financial crisis in 2008, apparently did not take sufficient account the return of demand for capacity, leading to the emergence of traffic hot-spots and since 2017, increasing delays.
Insufficient resilience provisioning exacerbated this challenge. When the demand came, the available resilience in the system could not always cope with the extremes of demand, especially in peak season.
ANSP’s around the world will be seeking opportunities to trim their costs. What is cut and where, will have real consequences for capacity and delivery of long-term plans.
Delivering on environmental objectives
Governments across the world have already provided emergency loans and grants to shore up airlines, airports and ANSP’s. It is not yet clear what strings have been attached to the financial aid, it seems likely that improvements in environmental performance will be one area subject to political scrutiny. Despite wide ranging green programmes, this is one area where the ‘old normal’ was not good enough. The industry can and should do better.
Individual stakeholders have a limited ability to improve environmental performance of flights. On average, each flight in Europe is sill 49km longer than a direct flight - about four minutes of flying for a jet airliner - which with vertical flight efficiency improvements, is an unresolved topic of a range of existing long-term efficiency initiatives.
Elsewhere determining exactly how airline and airport operator policies contribute to delays and inefficiencies is difficult to determine at a system level. Key performance indicators to consistently measure airline and airport performance in particular, are not widely available.
Europe’s busiest airports represent a large proportion of arrival delays by scheduling more flights than the runways can efficiently handle in all operating circumstances, increasing delays in the air and on the ground.
Policy makers and regulators could press for improved resilience in airport capacity declarations. Delays, should reduce as a result, environmental performance for subject airports should improve significantly, and, EU 261 passenger delay compensation risk will be reduced.
What measures should governments consider
Covid-19 has undoubtedly had a fundamental and irrevocable impact on air transport, devastating the industry. It has also provided an unprecedented opportunity to better align stakeholders on shared issues, both national and international. The reduced size and extent of air transport activity globally will have a profound impact on ANSP revenue generating ability, budgets will reduce.
Policy makers and regulators should stimulate increased collaboration among aviation stakeholders for the development of pandemic recovery plans that enable cost reductions and investments that support the realisation of both short and longer-term objectives for the industry.
Government must be part of this collaborative effort to ensure that policy ambitions are supported with clear objectives and cost benefits that can be understood, agreed and pursued across the industry. The need for collaboration and an accelerated pace of change has never been greater.
Environmental imperatives are an example of an area in need of improved collaboration. A better balance of real capacity, reflecting a sensible margin for system resilience, with overall demand is needed. This will require compromise. Whether by airports wishing to make the maximum use of scarce runway resource, airlines scheduling unachievable turnaround times to maximise aircraft utilisation, or ANSP’s accepting an ever-increasing demand on an airspace system that is (was) already over-stretched.
Governments and stakeholders should consider:
- Introduction of national and international policies to reduce congestion on the ground and in the air, thereby increasing system resilience and efficiency, especially related to major hubs.
- Incentivising distribution of traffic more evenly, to make better use of underutilised runways and airspace. For example, differential airspace charging for congestion hot-spots
- Focus on KPI that reduce both extended arrival routings and departure delays, which should have a measurable impact in reducing both aircraft noise and emissions, especially for the areas that have been the worst affected.
- Cross industry focus and accountability for improvements to environmental performance, monitoring and reporting.
By taking such steps, not only could the environmental performance be improved, benefitting the communities, airlines and airports concerned, the associated airspace congestion would also be partly relieved, reducing pressure on ANSP’s facing complex investment decisions and helping to ensure that essential airspace modernisation is continued.
As Rahm Emmanuel, President Obama’s chief of staff said, “never let a serious crisis go to waste”. Meaning “that it’s an opportunity to do things you think you could not do before.”
About the author: This article is based on a wider paper published in June. Graham Lake has spent more than fifteen years in international aviation policy advocacy based in London and Geneva, as well as a period as director general of CANSO, the trade association for air traffic management providers.