Cost effective ATM – from the perspective of airspace users Torbjørn Lothe, ATM Conference 19 May 2015

A need to modernise the global ATM system  European airspace is among the busiest in the world  Over flights on busy days and high airport density  "Antiquarian" organizational structure & old technology solutions  The need to modernise and streamline the global ATM system is clear  From an airline perspective, the benefits will be seen in a number of areas:  Capacity improvements  Environmental savings  Cost reductions  Fewer delays  Continuous improvement of today's renowned safety in air transport 2

Fragmented organisation of the European airspace  The airspace in Europe is organised in a fragmented way  There are 37 different ANSPs in Europe  63 enroute centers, with  Duplication of tasks  A comparison:  US: 20 ACCs  A Eurocontrol study from 2010 showed that the US ATM system is able to manage 67% more flights with less air traffic controllers.  Key word for this is fragmentation in Europe  Russia: Plan to consolidate its ACCs to 13 3

Fragmentation means increased costs  Total economic cost of €12.7 billion  In 2012, the failure to implement SES resulted in:  €4.5 billion in costs from flight inefficiencies  10.8 million minutes of ATFM delays costing an estimated €1.45 billion;  7.8 million tonnes of wasted CO2 (Source: Eurocontrol) 4

Need for reform 5  SES aims to triple European capacity and half the unit costs of delivering ATM  To achieve this EU has established a framework of five pillars:  technology, safety, performance, airports and human factors  Two packages of regulation have been put in place (in 2004 and 2009) and a third (SES II plus) is still in process of adoption (?)  Yet, a lot remains to be done before the objectives of SES are fulfilled

Slow implementation of SES in Europe  We see a political inertia in the European Member States to move things forward within this area  the development of performance plans by states and FABs has been slow  Minimum progress with FABs –not optimized airspace along air traffic flows, nor optimized human and technical resources  The total economic cost of ANS across Europe still remains unacceptably high  ANSP’s continue to make significant profits above that proposed to regulators  European airline earnings over the same period were the lowest amongst the worlds major regions 6

Slow implementation - why?  Historically, most air traffic providers are state-owned in a monopoly market  Close links between many Member States and ANSPs  The incentives to change have been weak for the ANSPs – bottom-up approach  Strong unions with a lot of power  Issues relating to sovereignty and military restrictions 7

What needs to be done – in Europe and in Norway respectively?  In Europe – to mention a few areas:  Stronger and targeted SES legislative reforms  Member states and FABs must have a clear commitment to structural changes  with binding targets and financial incentive mechanisms  FABs should be able to demonstrate fulfillment of SES targets  Number of ATCCs in Europe should be reduced  European airspace will need to be operated collaboratively as a network  Service providers will need to form broader/different relationships and reach a greater level of collaboration 8

What needs to be done – in Europe  Standardisation of ATM equipment is an effective means of increasing the efficiency of ANSPs – SESAR is key  Support services should be unbundled and rationalized at FAB level - or possibly as centralized services?  Control tower services should be open for competition 9

What about Norway….?  Avinor Air Navigation Service (Avinor Flysikring AS) has, since summer 2014, been a subsidiary to Avinor AS  We welcome this decision, but  We believe that Avinor Flysikring should be completely separated from Avinor AS  Today, the ties with Avinor AS is still too close to ensure sufficient independence  Avinor Flysikring is currently the only ANSP in Norway  Appointed by the Ministry of Transport and Communications  For en-route; 2024  Terminal: 2017 (together with Avinor AS) 10

Changing for the future  The Norwegian Government has decided that control tower services should be open for competition  We welcome this decision!  Why?  It will establish a competitive marked for ANSPs in Norway  providing a strong incentive for the competing ANSPs to provide efficient control tower services at a lower cost than we see today  It will "force" Avinor to rationalise and reorganise its services - focusing more on the costs for the "end-users"  It may adversely be a new business opportunity for Avinor  Remote towers being one such possible area 11

Essential elements in achieving the wanted result of a competitive marked?  Control tower services at several of Avinor's towers should be bundled together before a call for tender is made  Giving a more solid base for a good business case  The issue of ownership of required ATM infrastructure needs to be decided on – how will remote tower solutions fit into this?  We believe that the airports should have ownership of necessary ATM infrastructure  However, most importantly: ownership must not be an entry- barrier for new ANSPs  For the private Norwegian airports: crucial that Avinor provides sufficient information to allow them to stipulate accurate requirements etc. in a future tender 12

The importance of the SES Performance Scheme – enroute 13  For en-route:  Avinor Flysikring has become more efficient and cost driven these last years  The reason behind these changes being the introduction of the SES Performance Scheme for enroute services  Avinor's enroute charges are now amongst the lowest in Europe  Still, there are areas of continued improvement:  Today, enroute service is provided from one ATCC – located in three different places (Stavanger, Røyken and Bodø)  Do we need three "branches" of the ATCC in Norway – extra costs?  Overhead costs

The importance of the SES Performance Scheme – terminal charges  For terminal charges:  Up until SES RP2, no special targets were set for Determined Unit Cost (DUC) for terminal ANS  Avinor's terminal charges are high  Now, in SES RP2 targets for DUC for terminal charges are introduced  Will this affect the level of charges?  Other factors contributing to high terminal costs:  Use of AFIS in airports instead of ATC?  Strict language proficiency requirements?  Is the criteria used to allocate costs between terminal and enroute services correctly applied? 14

NEFAB – is it really a FAB? 15  Norway is part of NEFAB, but why?  According to Prop. 143S ( ) "the savings for the users and ANSPs of the establishment of NEFAB will amount to approx. 400 million Norwegian kroner per year from 2015, and more than 600 million kroner per year from 2020…. for the period 2015–2025 shows savings between og million kroner…."  Based on progress so far – we are not convinced…  Has to deliver free route airspace in agreement with NUAC

with IATA's SOS for SES I16