ATM talking points

Airport performance Are queues really inevitable?

Market liberalisation Opportunity or threat?

Achieving long-termcost effective procurementMust it be so difficult?

Implementing the SES How to avoid even more regulation

Strengthening NSAs An investment worth making

Civil-military integration Accommodating the military mission

Reducing regional fragmentation The responsibility of FABs

Operational continuity … in the light of strategic change

“talking points”As consultants we often shy away from discussing the big issues in public. Sometimes from fear of triggering conflict; some-

times because when you shout that the “Emperor

is wearing no clothes”, no-one else is ready

to join in yet! But for once we thought it would

be good to tell you what we think and hope that

in return you take the time to tell us what you

think. We find that debating things helps us to

understand them more deeply – and generates

energy for action. So in the following pages, eight

of our most senior consultants tell you what is on

their mind. Please join the debate in person,

on Linkedin, twitter, Facebook or by email.

Airport performance Are queues really inevitable? Nick McFarlane 3

Market liberalisation Opportunity or threat? Steve Leighton 4

Achieving long-term cost effective procurement Must it be so difficult? Mike Shorthose 5

Implementing the SES How to avoid even more regulation Paul Ravenhill 6

Strengthening NSAs An investment worth making John Raftery 7

Civil-military integration Accommodating the military mission Alan Corner 8

Reducing regional fragmentation The responsibility of FABs Naheed Arshad 9

Operational continuity … in the light of strategic change Ben Stanley 10

Everyone understands the frustration of hanging about in queues, whether they be in the supermarket, the bank or at the security gates at an airport. Because queues are usually managed first-in-first-out (FIFO), the incentive is to race to be at the front.

The queues of aircraft arriving at or departing from busy airports are no different. The incentive to be first in the queue causes bunching. This results in negative impacts, including excessive delays and unnecessary emissions. The problem is especially acute first thing in the morning just after the airport has opened for business, resulting in the familiar sight of aircraft circling in the sky and lines of aircraft on the ground.

Like the tear-off tickets used at the supermarket to reserve a slot at the deli counter, air traffic managers could potentially use the airport slot as a mechanism to incentivise the appropriate behaviours at airports. For example, if holding in the stacks were managed on an on-time-in-on-time-out basis, there would be little incentive to race to be first at top-of-descent. So bunching

would be reduced, there would be fuel and emissions benefits and the passenger experience would be improved. There are also more strategic benefits, including less variability in actual journey times allowing airlines to reduce the sometimes large buffers in their block times needed to meet punctuality goals.

There are, of course, difficulties associated with this approach, not least that the queue has always been managed as FIFO. The fact that something has always been done that way is not an argument for

continuing. Perhaps the definition of ontime should also be extended from on-blocks upstream to a point in the sky, top-

of-descent? There would also need to be mechanisms to ensure good behaviour and prevent cheating – things like flight plan-slot correlation, already used in Germany for the Euro Soccer Championships and proposed for the London Olympics.

Whilst technical and operational difficulties exist, the hurdles are not insurmountable. ANSPs, airlines and regulators need to work together to reduce queues before increased congestion forces their hand.

Airport performance Are queues really inevitable?

Nick McFarlaneNick is Helios’ Managing Director

and one of its founders. With over

20 years’ experience of the ATM

industry, Nick is an acknowledged

expert in the introduction of new

operational concepts and the

underlying technologies. This

includes a deep understanding of

the financial and business aspects

as well as the operational dimension

and the technical perspective. Nick

has recently been analysing the

operational efficiency of Arlanda

airport.

nick.mcfarlane@askhelios.com

linkedin.com/in/nickmcfarlane

3

If holding in the stacks were managed on an on-time-in-on-time-out basis, there would be

little incentive to race

The demands of meeting European policy and legislation are difficult enough but ANSPs must also respond to increasing market liberalisation. Market liberalisation is the process of allowing greater competition and supply in a market. In ATM, this means:

• allowing increased competition for ATC service provision at airports (as recently seen in Spain and Sweden)

• encouraging greater provision of outsourced services (eg communications, supply of ATC training)

Liberalisation expands the opportunity for ANSPs to offer commercial services to other ANSPs. It can offer a benefit, by allowing ANSPs to sell their services or to procure others from the open market where competition can reduce price and increase service levels. However, it can also be a threat, if it means that an existing part of the ANSP’s business is opened up to competition (as has occurred in some States for airport ATC provision).

In Europe, FABs enable ANSPs to provide common services, which is one response to market liberalisation. Collaboration between ANSPs can be a good alternative

to liberalisation where the opportunity for competition is limited. Some ANSPs have shown this co-operation even outside of a FAB – for example, the Entry Point North Training centre which is a joint venture of the Swedish, Danish and Norwegian ANSPs.

ANSPs need a procurement strategy to react to these new opportunities and threats.

Any strategy, whether defensive or offensive, needs to reflect the particular nature of ATM industry. Lowest cost services are not acceptable if they compromise safety. Procurement

decisions need to reflect the importance of high service quality and regulatory requirements. Language and local knowledge form natural

barriers to the outsourcing of some services.

Nevertheless, there is plenty of opportunity for innovation in ATM and benefits to be gained from greater market openness. Firstly, ANSPs need to plan for regulatory and technology changes, and ensure they are protecting their own core business. Secondly, they should look for opportunities to take advantage of those changes. Inaction is not an option.

Steve LeightonSteve is a consultant at Helios with

a professional interest in new ways

of structuring and providing ANS. He

has had a career long involvement

in helping ANS providers implement

new collaborative business models

for service provision. Steve has

consulted in areas of ANS

liberalisation and restructuring from

both the airport and ANS provider

side focussing on practical measures

to provide real-world, not paper,

benefits.

steve.leighton@askhelios.com

linkedin.com/in/steveleighton

Market liberalisationOpportunity or threat?

4

Liberalisation expands the opportunity for ANSPs to offer commercial services to

other ANSPs

Achieving value for money through the procurement of new ATM systems has never been an easy path, but there are now additional pressures to make the journey absolutely necessary. SESAR is changing the competitive dynamics driving more complex systems and accelerated interoperability. At the same time, the performance scheme is putting cost pressure on ANSPs, to which suppliers will have no choice but to respond.

So what’s wrong with how ATM procures new infrastructure?

• Implementing new ATM systems often requires a few large “big bang” procurements. Unfortunately, they are also characterised by long lead times and a high incidence of delayed delivery.

• Large investments mean long relationships with suppliers. The flip-side is little genuine competition between suppliers and being trapped into programmes of multiple system upgrades.

• Safety critical requirements have historically led to detailed input system requirements, as opposed to

output service requirements. Without an appropriate sharing of design and performance risk, the public sector

cannot fairly expect the private sector to deliver long-term value for money.

So achieving value for money when entering

into a long-term supplier partnership is indeed difficult – and it is complex. But the challenge cannot be ignored any longer and it is possible to overcome.

ANSPs must firstly understand the impact of the performance scheme and its associated regulation. From this should emerge a clearer picture of business requirements and service levels that can be used to better shape the objectives of any procurement. Secondly, common functional specifications − in partnership with other ANSPs − will allow suppliers to harmonise their product roadmaps to their customers’ requirements. ANSPs must recognise that too many ‘special’ operational concepts will come at a cost and will need to be heavily justified.

Last but not least, there is urgent need for reform of public procurement legislation. The current laws are far from agile, can present barriers between customer and suppliers and lead to unwieldy and poor value for money supply contracts. Revised procurement legislation is needed which maintains the principles of transparency and fair competition but which embraces the principles of private sector supply chain management.

In Helios’ view, such reforms would make possible a genuine customer-supplier partnership, better suited to meeting the SESAR-driven technology challenge and achieving the cost-efficiency targets of the performance scheme.

Achieving long-term cost effective procurement Must it be so difficult?

Mike ShorthoseMike is a founding Director and

Chairman of Helios. He has been

advising customers on a wide range

of technical and business issues

associated with Air Traffic

Management for over 20 years.

These include planning and

execution of large air traffic control

projects, organisational change

and cost benefit analysis. Mike

specialises in loan advice and

compliance monitoring and he

works closely with ANSPs, FABs and

banks on how to procure and fund

common infrastructure and services.

mike.shorthose@askhelios.com

5

Long-term supplierpartnerships can lead to

value for money

The adoption of SES-II in 2009 is supposed to herald a shift from prescriptive implementing rules (IRs) to performance based rules.

The rules developed under SES-I tended to be prescriptive – that is they defined a particular solution. For example the datalink services IR requires ANSPs to implement a fixed set of datalink services. The rationale for the rule is that if every en-route ANSP uses these services, there will be a 10% uplift in capacity across the network. All well and good; except that the immediate benefit to an individual ANSP may not be that great. ANSPs without a capacity constraint may not see any direct benefit. ANSPs with capacity constraints may consider that an alternative strategy would be more cost effective.

Within SES-II, the performance scheme provides powers to the Member States to incentivise ANSP behaviour to meet agreed performance targets that are consistent with the EU-wide targets established by the EC.

For the benefits to be realised, ANSPs require certain freedoms in deployment planning to optimise their own system. In order to do so they will take advantage of cooperation within FABs and

wider cooperation with other ANSPs with similar procurement issues. The difficulty is that if ANSPs are given this freedom, large projects – like the introduction of datalink – may never gain sufficient consensus.

A balance is needed between freedom to optimise local systems and mandates for network-wide implementations. IRs need to ensure interoperability of systems

without enforcing a ‘one size fits all’ mentality that will harm an ANSP’s ability to meet the targets.

For pan-European projects, ANSPs – including the Network Manager and SESAR – must work together to present the evidence that network investments are beneficial.

If the correct balance is reached, Implementing Rules will be limited to the technical level of performance and interface issues. This leaves an ANSP to define the optimum deployment solution for its own airspace. More prescriptive rules will only be resorted to where

ANSPs fail to deliver on their targets. And of course if that still doesn’t work, the European Commission will adopt a more top-down approach in SES-III.

Paul RavenhillPaul is Helios’ technical director

and a leading expert on the

implementation of the Single

European Sky. He has advised the

Commission, EUROCONTROL, the PRU,

ANSPs and manufacturers on the

impact of SES legislation,

including the establishment of

the SES performance scheme and

the use of the interoperability

regulation to ensure SESAR

deployment. Paul is well known

for his work with the Industry

Consultation Body which Helios has

supported since its inception.

paul.ravenhill@askhelios.com

6A balance is needed between

freedom to optimise local systems and mandates for

network-wide implementations

Implementing the SES How to avoid even more regulation

In the second package of SES legislation, the European Commission introduced a performance scheme to accelerate reform in air navigation. This requires Member States, through their National Supervisory Authorities (NSAs) to establish national binding targets for cost-efficiency, capacity, safety and the environment consistent with targets set by the Commission at EU level.

National targets are presented in national performance plans (NPP) in which the NSA should justify the targets set in terms of local conditions and demonstrate their adequate contribution to EU-wide targets. NPPs should also define measures and incentives to ensure those targets are achieved.

The Commission, aided by the Performance Review Body, is just completing the assessment of the NPPs for the first Reference Period (RP1). As the dust begins to settle, it is clear that ANSPs have increased their commitment to achieving more ambitious cost-efficiency targets and are believed to have come close to achieving the capacity target. But the process has been painful for many and open issues abound:

• How can the bigger costs savings needed to deliver the SES objective of halving unit costs be achieved?

• Why did only two States define incentive mechanisms for capacity?

• How should NSAs justify national targets and demonstrate adequate contribution at EU-wide targets?

• What is the right balance of influence between the national regulators

Clearly everyone needs to learn lessons from RP1

producing the plans, and the Commission approving those plans?

Clearly, everyone needs to learn lessons from RP1. The regulation itself can be improved with additional key performance indicators and better assessment criteria – and guidance could be provided on incentivising performance.

But fundamentally, RP1 also demonstrated that we need stronger regulators. To some extent SES, and the performance scheme in particular, is built on the premise that a slight and temporary increase in regulatory costs will deliver big improvements through improved cost-efficiency and safety. NSAs need to realise

the potential for greater gains in RP2 by ensuring that they are able to challenge the business

plans prepared by ANSPs. Further, States and NSAs must be prepared to incentivise ANSPs to really deliver on their promises.

And we all need to recognise that if SES is to succeed, NSAs must be adequately resourced for the task ahead.

John RafteryJohn came to ANS having previously

helped design and implement a

number of price regulation systems

for transport and utilities through-

out the world. In ANS, he helped

the Performance Review Commission

design and apply its framework

for the review of performance. He

has advised international bodies,

national regulators, and 21 ANSPs

on ANS policy and economics. John

is one of the world’s acknowledged

experts in cost allocation for ANS.

john.raftery@askhelios.com

Strengthening NSAs An investment worth making

7

Reference Periods - target setting process

Ask a military officer what their airspace requirements are and they will probably say “operational freedom and the ability to fly when and where we want”.

The military requirements are really no different to those of other airspace users – but the nature of the operation means they will always need special consideration. The future military mission is changing – new capabilities, such as UAS, are emerging and synthetic training is progressively used to complement live flying. The military will operate a more diverse range of aircraft that are equipped to different standards and will require less-frequent but ‘on-demand’ access to flexible and probably larger volumes of potentially cross-border airspace.

SESAR argues that the introduction of 4-D trajectory based operations will provide flexibility to meet future capacity needs – but what does this mean for the military?

To accommodate the unpredictable and necessarily short planning horizon, the future system must enable any aircraft (from the latest high-performance combat aircraft to a UAS) to operate freely in shared airspace. It must also provide access to special use airspace which can be turned ‘on and off’ at short notice – or even dynamically in flight to achieve mission objectives.

No-one denies the impact this will have on other airspace users who may need to be dynamically re-routed to accommodate military operations, but who will also now benefit from previously unavailable airspace.

The concepts of operation and the ‘business’ and ‘mission’ trajectories need further development to balance the ‘predictability’ required by the system and the flexibility demanded by the military. To achieve this balance, the following regulatory issues need to be addressed:

• a common certification route for civil and military avionics and CNS equipment

• technical enablers to provide interoperability between civil and military systems

• a means of securely sharing information across a SWIM architecture

The challenge should not be under-estimated. SESAR is making progress by bringing together the views of the military.

However, the military remain less influential than commercial operators and the

ANSPs in determining future concepts. Wider engagement, real focus and some ‘out of the box’ thinking is required from the military, if they are really going to be accommodated rather than tolerated.

Civil-military integration Accommodating the military mission

Alan CornerAlan is a former ATCO who has

worked extensively in the civil and

military ATM environment. At the

UK Ministry of Defence he managed

long-term ATM service provision and

procurement contracts. Operationally,

his projects have included the

development of new CONOPS and

the transition of military ATC to new

centres. For Helios Alan is leading

civil-military and operational

aspects of FAB developments, and

defining technical requirements

for civil-military interoperability,

including SWIM.

alan.corner@askhelios.com

linkedin.com/in/alcorner

8

The concepts of operation and the ‘business’ and ‘mission’

trajectories need further development

Incredible as it seems, fragmentation accounts for approximately 40% of the air navigation service charges in Europe. The battle against fragmentation is therefore a principle aim of the Single European Sky and FABs are one of the main weapons.

There are many facets to de-fragmenting the ATM system: optimisation of airspace and route networks regardless of national boundaries; cross-border provision of air traffic services; joint procurement of infrastructure; interoperability and convergence of ATM systems; rationalisation of air traffic control centres; coordination and consolidation of services (in training, meteorological services, aeronautical information).

FABs are starting to go further than optimisation of airspace and are making moves to reduce fragmentation at a regional level. They recognise that the significant benefits for ANSPs and airspace users can only be achieved through joint planning and procurement of CNS/ATM systems, consolidation and centralisation of functions and optimisation of ATC centres.

Although there may be a willingness to make improvements in these areas, a number of obstacles are slowing the rate of progress:

• national legislation restricts the forms of procurement allowed

• a history of bespoke developments in ATM systems limits interoperability

• the need to plan well in advance to align system replacements requires coordination and decision making at the highest levels

FABs have the potential to deliver optimisation at the regional level,

however, the big wins may take time. They will need coordination at the strategic level as well as political buy-in and support. States

must play their part by ensuring that performance targets actively incentivise ANSPs to be ambitious in reducing fragmentation.

ANSPs must use the FABs to eradicate fragmentation. They will need to go further

than current plans and start proposing radical solutions if substantial cost savings are to be achieved. Looking at new ways of providing capacity, through networks of highly interoperable centres dynamically sharing resources is essential.

Reducing regional fragmentationThe responsibility of FABs

Naheed ArshadNaheed is Helios’ leading expert

in Functional Airspace Blocks.

She has been central to our work

for FAB Europe Central, FAB

Central Europe, the UK-Ireland

FAB, and most recently the Baltic

FAB Feasibility Study. Naheed

has managed several CBAs of

operational change within ATM and

played a major role in the ATM/

CNS fragmentation study for the

Performance Review Commission.

She has also undertaken a number

of regulatory impact assessments

on SES concepts for the European

Commission.

naheed.arshad@askhelios.com

9

FABs have the potential to deliver optimisation at the regional level, however, the

big wins may take time

The challenge for all businesses is to implement change whilst maintaining daily operations. The ANSP challenge is greater than most – many of the changes are enforced by European legislation that is not always aligned with local conditions, and the daily operations are a 24/7 safety critical mission that underpins the economy. So how should ANSPs rise to the challenge of modernisation in the emerging regulatory environment?

To illustrate this issue, we can take some specific impacts arising from SES legislation:

• The Common Requirements for the Provision of ANS (EU Reg 1035/2011) set out a number of requirements to be certified as an ANSP. The notion of an Integrated Management System is introduced, incorporating safety, security, environment and human performance. Many of these requirements result in updates to internal processes and procedures, along with potentially altered organisational structures. It is a common complaint that many new processes may be over-designed with little sense of a wider business impact.

• Increased capital investment is required to comply with technology deployment timelines, such as IP1 and SESAR. FABs are intended to bring efficiencies, but currently appear to place a resource burden on ANSPs without significant OPEX or CAPEX reductions. This is all in the context of pressure from the Performance Scheme to significantly reduce the determined unit rate.

Organisational design theory links a business’ optimum structure with its

environment. The rapid changes currently being witnessed suggest a more agile and flexible organisation is needed, with the ability to work across department boundaries.

Integrated change management processes can take account of all business constraints − internal and external. But creating a lean organisation often requires facilitation to bring various interests together. It also takes an understanding of new regulatory processes, stripping out the unnecessary whilst maintaining the core objectives.

What is certain is that ANSPs must change. Tensions and imbalances will stretch them to breaking point, unless a

proactive approach to change management is employed. Successful m o d e r n i s a t i o n requires a radical review of processes

and procedural changes. And change management processes are key to keeping operations running whilst change is underway.

Ben StanleyBen is a director of Helios with

world-wide experience in change

management at a State, regulatory

and organisational level. He has led

teams in ANSPs (including FABs),

airports, and airspace users to

facilitate modernisation, introduce

new concepts, and help decision

makers understand the impact. His

work has included Master Planning,

business modelling, technical

standardisation and most recently,

driving the implementation of

safety management across all

aviation stakeholders on behalf of

the Government of India.

ben.stanley@askhelios.com

linkedin.com/in/benkstanley

Operational continuity …in the light of strategic change

10

The rapid changes currently being witnessed suggest a more agile and flexible organisation is needed

We work with a wide range of organisations − air navigation service providers, regulators, government agencies, manufacturing industry and investors − to be at the forefront of some of the industry’s most

exciting developments: the Single European Sky initiative, Functional Airspace Blocks and the great strides towards a performance-based ATM system.

We understand all aspects of the ATM business ranging from the strategic, through the operational, to R&D. Our broad staff profile means that we can draw on the internationally-recognised expertise of

senior business managers, economists, operational experts, safety and security professionals, systems engineers and technology specialists.

Our success has been recognised through two Queen’s Awards for Enterprise (2004, 2009) and through the long-standing relationships and partnerships that we have developed with our clients.

By combining innovative thinking with a practical approach, we will continue to help our clients improve and transform the industry in the face of the new and emerging challenges of the 21st century.

Helios is Europe’s leading independent consultancy in Air Traffic Management.

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