TABLE OF CONTENTS

1............. Introduction. 3

1.1...... Policy context 5

1.2...... Organisation and timing. 7

1.3...... Consultation and expertise. 7

1.4...... Consultation of the Impact Assessment Board (IAB) 8

2............. Problem definition. 9

2.1...... The core problem.. 9

2.2...... The most affected stakeholders. 26

2.3...... Baseline scenario. 27

2.4...... Subsidiarity. 29

3............. Objectives. 30

3.1...... General objective. 30

3.2...... Specific objectives. 30

3.3...... Operational objectives. 31

3.4...... Coherence with other horizontal policies. 33

4............. Policy options. 33

4.1...... Identification of possible policy options. 33

4.2...... Policy options 1: Support services. 34

4.3...... Policy options 2: Focusing ANSPs on customer needs. 35

4.4...... Policy options 3: Ineffective role of NSAs. 35

4.5...... Policy options 4: Performance scheme governance mechanism.. 36

4.6...... Policy options 5: Refocusing of FABs. 37

4.7...... Policy options 6: The role of the network manager 38

5............. Assessment of impacts. 39

5.1...... Introduction and general methodological approach. 39

5.2...... Support services. 40

5.3...... Focusing ANSPs on customer needs. 44

5.4...... Ineffective role of NSAs. 48

5.5...... Performance scheme governance mechanism.. 51

5.6...... Refocusing of FABs. 55

5.7...... Role of the network manager 58

6............. Assessment of policy scenarios. 62

6.1...... Formation of policy scenarios. 62

6.2...... Assessment of impacts of the policy scenarios. 64

6.3...... Comparison of the policy scenarios. 68

7............. Monitoring and Evaluation. 69

7.1...... Evaluation arrangements. 69

7.2...... Monitoring arrangements. 69

ANNEX I Abbreviations used. 71

ANNEX II Roles of different players in the ATM system.. 73

ANNEX III Overview of SES legislation. 76

1............. Overview. 76

1.1...... SES I 76

1.2...... SES II 79

2............. Detailed description of key elements 80

2.1...... The creation of the Single European Sky. 80

2.2...... A joint undertaking to develop the new generation European air traffic management system (SESAR) 86

2.3...... Air traffic flow management 87

ANNEX IV Consultation of stakeholders. 90

1............. List of stakeholders consulted throughout the consultation process 90

2............. The public consultation. 92

2.1...... Coverage. 92

2.2...... Results of the public consultation. 93

ANNEX V Assessment of options. 114

1............. Introduction. 114

1.1...... Support services. 116

1.2...... Focusing ANSPs on customer needs. 125

1.3...... Ineffective role of NSAs. 134

1.4...... Performance scheme governance mechanism.. 143

1.5...... Refocusing of FABs. 153

1.6...... Role of the network manager 163

1.7...... Impact of scenarios on employment 171

ANNEX VI Description of performance scheme and monitoring mechanisms. 174

Executive Summary Sheet

Impact assessment on Legislative proposals to update the regulations on Single European Sky – SES2+

A. Need for action

Why? What is the problem being addressed? Maximum 11 lines

[Problems' size, probability of occurrence and expected evolution. Main underlying drivers (refer to evaluation results if pertinent). Most affected stakeholders] The Single European Sky (SES) initiative aims to improve the overall efficiency of European Air Traffic Management (ATM). The experience with SES I since 2004 and SES II since 2009 has shown that the principles and direction of the SES are valid and should continue, but high ATM costs and delays in SES implementation persist. The SES overall target or halving the costs for airspace users by 2020 will not be achieved. The two problem areas addressed in SES2+ are (1) insufficient efficiency of Air Navigation Service provision and (2) a fragmented ATM system. Regarding problem area (1) the drivers are gaps in Air Navigation Service Providers (ANSP's) performance and shortcomings in setting up and enforcing the performance scheme. Drivers of problem area (2) are the mediocre performance of Functional Airspace Blocs (FABs) and the fact that the Network Manager is not yet meeting expectations. The most affected stakeholders are the Member States and ANSPs, but it also affects airspace users (airlines, military and business and general aviation).

What is this initiative expected to achieve? Maximum 8 lines

[Specify the main policy objectives providing a tentative quantitative indication of the targeted results ] The main objectives are (1) to improve performance of ANSP's in terms of efficiency and (2) to improve the utilisation of ATM capacity. The aim is to reduce ATM costs, improve flight efficiency and reduce delays as well as emissions. For that purpose at the operational level the initiative will clarify the institutional set-up of European ATM organisations and future-proof it to support the SESAR programme. Targets will be established within the framework of the performance for each reference period. Key indicators will be the cost charged to users, delays (min/flight), reductions in average flight extensions and improvements in runway throughput at capacity constrained airports.

What is the value added of action at the EU level? Maximum 7 lines

[Transnational aspects. Limits of Member States action.] Already in SES I (2004) it was agreed that actions by Member States alone cannot ensure the optimal building of capacity and safety, whilst assuring reductions in the cost levels of EU ATM services. By shifting airspace management from national level to the EU level, the SES aims to ensure consistent implementation of the existing EU air traffic acquis and to enable airspace users to benefit from a single consolidated legislative, operational and R&D framework and to face predictable business conditions throughout the EU. This should lead to creation of a Single European Sky and improve the competitiveness of European aviation sector.

B. Solutions

What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? Maximum 14 lines

A total of 20 policy options have been considered in 6 policy domains. (1) For the ANSP support services options of functional and structural separation were considered to allow for a market based and efficient support services. (2) To improve ANSP's customer focus, enhanced consultation of airspace users with or without ANSP governance were discussed. (3) For strengthening the role of the National Supervisory Authorities (NSAs), options of EU-level co-ordination and expert pooling with or without the full institutional separation of NSAs from the ANSP's have been analysed. (4) Two different governance models were considered to beef up the performance scheme. (5) For refocusing of FABs on performance, options proposed either prescriptive targets or 2 possible ways to change the setup of FABs. (6) Finally, for strengthening the Network Manager; 2 governance options plus one add-on option on operational scope of the Network Manager were discussed. The options in each policy domain were further combined into 3 policy scenarios: Baseline Scenario, Risk optimised scenario (moderate improvement, minimal risks) and Performance optimised scenario (significant improvement with higher risk of opposition). The performance optimised scenario 3 is considered to be the preferred policy choice as it heads towards a competitive and sustainable aviation system and economic growth in long run, even though during the restructuring phase it causes short term social costs.

Who supports which option? Maximum 7 lines

The performance optimised scenario 3 would result in highest benefits for airspace users, while having stronger social consequences for ANSPs. Therefore it is strongly supported by the airlines, but opposed by many ANSPs and Member States. Risk optimised scenario 2 would bring less befits to airspace users, but embedded also less impacts on employment and working conditions in ANSPS. Therefore it is more favoured by Member States and ANSPs. Trade unions and professional organisations who participated in the public consultation, opposed both policy scenarios.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise main ones)? Maximum 12 lines

Provide summary of expected economic, social and environment positive impacts indicating quantitative estimates to the extent possible and referring to main beneficiary groups (incl. consumers, businesses, etc.). Whenever the case: - Include a justification for lack of quantification. - Explicitly state absence of significant direct benefits in economic, social or environmental area According to the preferred policy scenario, the annual benefits for the airspace users are as follows: (a) more efficient ANSP services- around €780 million (b) improved flight efficiency (reductions in extra distance flown and hence also environmental benefits in terms of emissions) about €2 billion and (c) delay reductions about €150 million. In macroeconomic terms, the more favourable business conditions for airlines should create 13 000 new working places in the general economy, estimated induced GDP growth is €790 million by 2020 and €900 million by 2030. The main beneficiaries will be the airspace users and through them passenger, freight forwarders and new generation ANS providers.

What are the costs of the preferred option (if any, otherwise main ones)? Maximum 12 lines

Provide summary of expected economic, social and environment negative impacts providing quantitative estimates to the maximum extent possible and referring to main groups affected whenever relevant. Please clarify magnitude and type of compliance costs and their sources. Whenever the case: - Include a justification for lack of quantification. - Explicitly state absence of significant direct negative impacts in economic, social or environmental area The preferred scenario will add administration costs by €13.8-16.8 million per year and reduce employment in ANSP's by about 9400 over a decade. Apart from those mentioned above, there are no other significant economic, social or environmental impacts.

How will businesses, SMEs and micro-enterprises be affected? Maximum 8 lines

Clarify and justify regime for micros and for SMEs [total exemption / partial exempt. / Lighter / Others / Full application] - Describe any specific impact for these types of businesses (or state that there are none expected) All national ANSPs are currently large enterprises, thus this initiative will have no direct impacts on SME. Any indirect impacts are also limited, given that the air traffic charging system exempts small aircraft. The improvements in cost-efficiency would have a small positive impact on those small aircraft operators that are covered by the charging rules. The initiative may create new SMEs in the domain of ANSP, given that opening the market for support services could provide new business opportunities (in areas such as aeronautical information, meteorology or communications services) for SME's with innovation related competitive advantage. Some SME's could also participate in groupings of companies competing for tenders from the Network Manager.

Will there be significant impacts on national budgets and administrations? Maximum 4 lines

The only cost for national budgets is the need for an estimated 80 new oversight officials at a cost of around 13 million per year. However, the Member States have an obligation to ensure adequate resourcing of NSAs already under current legislation.

Will there be other significant impacts? Max 6 lines

No (why) / Yes [identify impact and provide reference to section in IA report] Reference impacts are those outlined in IA guidelines and not already covered above. For instance, fundamental rights, competitiveness, regional, simplification, international (third countries, trade and investment flows), competition etc. The initiative will have positive impacts for the competitiveness of the European ATM system, which would benefit all airlines (EU and non-EU) flying in the EU airspace. These impacts are discussed in sections 6.2.4 and 6.2.5 of the impact assessment report.

D. Follow up

When will the policy be reviewed? Maximum 4 lines

The Commission will review the application and effectiveness of SES rules at the end of each performance scheme reference period. Next report is due for 2015 and the one after that 2020. The Commission will evaluate whether the objectives of the initiative were achieved, and if not, consider which additional steps need to be taken in order to complete the task.

1 Introduction 1.1 Policy context

The Single European Sky (SES) initiative aims to improve the overall efficiency of the way in which European airspace is organised and managed through the reform of the industry providing air navigation services (ANS). Its development has involved two comprehensive legislative packages – SES I and SES II composed of four regulations[1] – and over 20 Commission implementing rules and decisions[2]. The framework of the four SES regulations is intertwined with the development of the European Aviation Safety legislation[3], the latter comprising a number of tasks entrusted to the European Aviation Safety Agency (EASA). And the launch of a comprehensive project to modernise equipment and systems for air navigation services under the SESAR title[4]. Existing rules touch upon five interrelated pillars addressing performance, safety, technology, human factors and airports.

The experience gained with SES I since 2004 and SES II since 2009 has shown that the principles and direction of the SES are valid and warrant a continuation of their implementation.

In SES II, the Member States had already agreed that performance of ATM should be improved by setting out a performance scheme, with binding performance targets for more efficient air navigation services, and creating a centralised Network Manager, that provides certain services, which can be better performed at network- rather than national level. Furthermore the States agreed to accelerate the development of Functional Airspace Blocks that seek benefits from co-operation between service providers. However the initiative is experiencing significant delays in its implementation, notably in the achievement of the performance goals and the deployment of its basic elements (such as functional airspace blocks (FABs) or National Supervisory Authorities (NSAs)).

As regards timing of the initiative, SES is unusual in the sense that a constant monitoring and evaluation system is in place in the form of the performance scheme, which allows the Commission to make corrections to policies very early. Currently the evidence coming from the Performance Review Body's daily work and this impact assessment shows that although the direction initiated in 2009 is correct, the speed is lacking. Therefore we should accelerate the development of the SES initiative, continuing to strive for an integrated European air traffic management system.

In 2009, when adopting the SES II package, the legislator decided that SES II would be done in two stages and invited the Commission to come back to do an alignment of SES and EASA regulations after the initial set of EASA implementing measures and audit experiences concerning ANS would be in place[5]. A recast of the legislative package was therefore already foreseen primarily aiming at simplifying and clarifying the border line between EASA and SES legal frameworks (see box 1-1).

The process of recast also gives the opportunity to assess the effectiveness of the existing legal provisions in the light of the experience gained in implementing the current SES II rules since 2009 and the evident lack of timely implementation of this initiative. This process of a periodic revision of the SES legal framework, known under the abbreviation of SES 2+ is intended to accelerate the implementation of the reform of air navigation services without departing from its original objectives and principles and forms a part of the Single Market Act II[6] initiative and aims hence also to improve the competitiveness and growth of the EU economy in general.

The purpose of this impact assessment (IA) is to support the development of a SES 2+ package which should improve SES II implementation by focusing on certain institutional matters as well as on further performance improvement of service provision.

In addition, the SES 2+ package would simplify the legislation by eliminating certain overlaps in the existing framework. Also the stakeholders have raised the concern of several overlapping areas and gaps existing in SES framework and expect that the roles of the various organisations involved will be clarified. Since this alignment is a pure recast measure already required by the legislation, it is not included in the scope of this IA. It also has no budgetary implications.

Box 1‑1: Rationale for recasting the SES legislation

Firstly, when SES II was approved and certain competencies were transferred to EASA in order to establish its role as the single EU aviation safety body, the European Parliament and the Council preferred to leave the corresponding and already existing competencies in the SES regulations intact. Instead it addressed this overlap of Regulations by inserting a new Article 65a into European Aviation Safety Legislation (Regulation 216/2008). This article requires the Commission to propose amendments to the SES regulations to take into account the requirements of Regulation 216/2008.

Secondly there is a more general mismatch between the approach used for all other sectors of aviation (airworthiness, crew licensing, air operations etc.) in the EASA framework and air traffic management (ATM). Whilst generally the approach is that all technical regulations are concentrated under the EASA scope to serve the objectives of Article 2 of 216/2008 and economic regulation is performed by the Commission, in ATM (i.e. SES) the picture is more mixed, with technical regulations stemming from various sources. It would be beneficial to ensure a harmonised approach to this important regulatory area, so that all consultations are performed with the same thoroughness, all rules fit in the same structure and serve same objectives, making life for those responsible for applying the rules easier and finally to ensure that the impending wave of technological innovations stemming from the SESAR initiative can be carried out in a co-ordinated manner both in airborne and ground equipage and procedures.

This impact assessment (IA) has been prepared by DG MOVE to support legislative proposals on improving efficiency, safety and competitiveness of the Single European Sky. The package proposes revising the four SES Regulations (549-552/2004 as amended by Regulation 1070/2009) and the EASA Basic Regulation (Regulation 216/2008, as amended by Regulation 1108/2009)[7]. This initiative concerns agenda planning number 2014/MOVE/001. The impact assessment roadmap has been published at the website of the Commission[8].

1.2 Organisation and timing

An Impact Assessment Steering Group (IASG) was created in July 2012. The following DGs were invited to participate: SG, BUDG, COMP, ECFIN, TAXUD, ENTR, MARKT, EMPL, HOME, ENV, CLIMA and SJ. The IASG met 4 times, in addition there have been exchanges of documents and comments by e-mail.[9] The last IASG meeting was held on 5 March 2013.

1.3 Consultation and expertise

The Commission services have discussed the developments of the SES with sector representatives on an on-going basis since 2000. In spring 2008 an IA was conducted also to support the SES II proposal. Furthermore a report on SES implementation was presented to the European Parliament and Council on 14 November 2011[10].

In order to support the Commission in the IA process for SES 2+, an external consultant was tasked to prepare an IA support study[11] and to analyse the results of the stakeholder consultation.

The public consultation in the form of internet survey was open between 21 September and 13 December 2012. A total of 83 responses were received. Most of them were from representative bodies at European level representing air navigation service providers (ANSPs), airlines, airport operators, manufacturing industry, other civil airspace users, representative and/or professional associations, trade unions and miscellaneous respondents.

The consultation was followed by interviews with major stakeholders[12] and a stakeholder workshop was organised together with the European Economic and Social Committee on 21 January 2013. In addition the Commission services have discussed the initiative with the Single Sky Committee (the relevant comitology[13] committee), the Civil Aviation Sectoral Social Dialogue Committee and the consultative expert group on the social dimension of the single European sky. Many bilateral meetings with air navigation service providers (ANSPs), airlines and other industry representatives at various levels have also been held.

All interested parties and Member States have been consulted in due time and discussions have covered all the key elements of the initiative. Therefore the Commission’s minimum consultation standards have been met.

Summary of main conclusions

In general stakeholders agreed with the initial set of problems as proposed by the Commission - the performance of ANS continues to be an issue and the SES progress so far is perceived as being marginal. However, the views were more dispersed as regards the objectives of the initiative:

· The airlines felt typically that organisation of the services in Functional Airspace Blocks (FABs), the functioning of the performance scheme and the overall management of technical interoperability regulations were lacking.

· The air navigation service providers (ANSPs) generally felt that the overall SES initiative was in need of attention and they in particular wished to target the performance scheme, interoperability and FABs.

· States (ministries and national supervisory authorities) saw also need for attention in the performance scheme, but focused especially on the FAB-related issues of overall airspace design and organisation.

· Rather on a different note the representative/professional organisations did not consider the efficiency of service provision being an issue and saw most need for attention in the human factor, as well as safety and interoperability regulations. They are clearly concerned of the possibility of job losses and deteriorating working conditions.

Overall, stakeholders were of the opinion that instead of producing new rules, the Commission needs to focus on improving the implementation and enforcement of existing regulations and reduce duplications and inconsistencies. However, there was considerable variation between the different interest groups as to the priorities and exact solutions which should be employed:

· Airlines wished to focus mostly on the performance scheme, while the ANSPs and states also raised the need to improve airspace design and organisation, airports and the interoperability framework.

· For introducing the market principles to the service provision, the trade unions and professional associations were against, while airlines strongly supported the idea and majority of the service providers themselves recognised the potential of more competitive services.

Annex IV provides more information on stakeholder consultation.

1.4 Consultation of the Impact Assessment Board (IAB)

This IA was reviewed by the IA Board on 10 April 2013. Based on the Board's recommendations, the report has been revised according to the following lines:

· The problem definition has been strengthened to better integrate the evaluation results of SES and to identify more clearly the shortcomings in the current situation.

· The general objective has been defined and operationalized more precisely. The importance and mechanism of fragmentation as a driver has been strengthened and the problems with current overall targets explained in more detail.

· The choice and differences between the policy scenarios have been explained better, and positions of stakeholders highlighted throughout the text. Links to the 2011 communication have also been strengthened and trade-offs between various policy options explained better.

· The costs and benefits of the various options have been explained in more detail by showing the calculations and logic behind the assessments and by improving the evidence based in so far as it is possible. However, whilst there is abundant data thanks to the work of the Performance Review Body, it has not been possible to indicate published sources for all of it, as much of the work performed for the Commission is based on ad-hoc studies and calculations. Where uncertainties exist, this has been explained as well as including the sources, assumptions, reasoning and relevance of all the estimates.

· Finally a general checking and correcting of the text has been performed to ensure al datasets are consistent and up to date.

2 Problem definition 2.1 The core problem

In 2005, the Commission stated its political vision and high level goals for the SES[14] and its technological pillar (SESAR). A full implementation of the SES should have, by 2020:

· improved safety by a factor of ten;

· tripled the airspace capacity;

· reduced the costs of air traffic management by 50%;

· improved the flight efficiency and reduced environmental greenhouse gas, air pollutant emissions and population exposure to noise by 10%.

These goals were expressed at a time when air traffic was still expected to steadily grow and double by 2020. Although since then an economic recession has hit all sectors as well as aviation and traffic volumes are stuck at the 2007 level, the successful implementation of the SES remains high on the agenda, as described in the Commission Report on the implementation of the Single Sky legislation. The relevance of original objectives depends to an extent on the traffic growth continuing at forecast levels. If that would have taken place, it would have been sufficient to retain total costs level, to achieve a halving of costs per flight by 2020. However the task has been made much more difficult with the levelling off of traffic growth, as cuts in absolute cost levels are required as well now. Even if it may be necessary to revise those targets eventually, this does not do away with the need to first maximise efforts to see what a realistic goal is.

The tools for de-fragmentation have been put in place by the two packages; however the overall progress is still falling behind. Ten years later the lack of progress is most pertinent for the development of FABs as well as for overall efficiency of the design and use of the European airspace. Also, in order to reap the full benefits of SESAR, the regulatory framework, oversight arrangements and the modus operandi of service provision need to be prepared to handle the oncoming technological changes, instead of stifling development by forcing new technologies into old operational concepts.

While the progress on safety has been satisfactory, improvements in capacity, ANS cost reduction and flight efficiency have been limited, so that stakeholders have expressed their concerns of efficiency gains being barely noticeable. The report will discuss each of these issues below[15].

Safety

There has been no accident with direct ANS contribution in 2011[16]) and between 2000 and 2011 there have been only three[17] major accidents in Europe, with a considerable ANS contribution. Whilst almost all accidents are caused by a combination of 5-10 individual causes, studies have shown that generally ANS is a contributor only in about 4% of all major accidents[18] Naturally we need to keep working to not only maintain, but where feasible improve these safety levels, but it needs to be acknowledged that safety as such is currently not a major problem in ANS, nor are rapid improvements with simple changes possible. Instead we need to continue of incremental improvements by continuing the current policies in co-operation between the Member States, EASA and ICAO.

Airspace capacity and delays

Figure 2-1 presents actual and forecasted European air traffic volumes for the period 2008-2011. Due to the economic crisis, air traffic in Europe decreased in 2009 to recover only very slowly afterwards until 2012. Traffic is expected to grow to 11 million flights in 2018, 16% more than in 2011, with annual increase slightly above 2%.

Figure 2‑1: Development of IFR[19] air traffic volumes (mainly airline traffic)

Source: PRR 2011[20]

Despite the slow growth in air traffic volumes, the congestion in airspace has prevailed and is still significantly higher than the targeted threshold (target: 1.0 min/flight in average, actual: 1.6 min/flight). In 2011, 18% of all flights were delayed by more than 15 minutes, with total delays of 17.9 million minutes. Figure 2-2 below shows a development in delays that correlates strongly with traffic growth, as the various measures taken to improve capacity have not been able to fully cover the needs. The 9/11 and SARS crisis gave some respite from the high delays of the late 1990s, but delays start to rise again as traffic picks up, until the economic crisis hits in 2008. Air traffic control capacity and staffing issues contribute the most to the delays.

Figure 2-2: Origins of en-route[21] Air Traffic Flow Management (ATFM) delays20

Cost of air traffic management

Total air navigation charges accounted for 6.2% of airlines' total operational costs[22] in 2010. The air navigation service (ANS) costs are presented in the figure below, divided into terminal and en-route cost. Initially SES looked only at en-route costs, but progressively as more data is becoming available, also terminal area costs are being addressed.

Figure 2-3: Estimated ANS-related economic costs to airspace users (gate-to gate)[23]

En-route service provision costs comprise more than half of total ATM-related costs[24] and are projected to increase, while terminal ANS provision costs are slightly decreasing.

The fundamental mechanism of ANS provision with the related costs has not changed. Often the cost of service provision per service unit shows actually a negative correlation to demand. Due to the high fixed costs of ANS provision, the overall cost levels stay fairly constant, so that during periods of low traffic demand, the average costs charged directly to the users do not fall, but can actually increase.

Flight efficiency and environment and noise impacts

Emissions from aviation account for approximately 3.5% of total CO2 emissions in Europe of which approximately 0.2% is due to ANS-related inefficiencies[25]. Air pollutants (NOx), have also been increasing in the EU from 1,8% to 5,8% of the total EU27 emissions[26]. Approximately, the same reductions as to CO2 emissions can apply to NOx emissions and therefore SES can have significant benefits on the overall air pollutant emissions.

Environmental costs in ANS are a function of flight efficiency[27]. Any shortening of the route towards the optimal great circle route, reduces fuel burn and emissions. The average en-route route extension was 4.6% of the routes flown in 2011 and each 0.1% improvement in that extension reduces fuel burn by 30 000 tons, which translates to 92 000 tonnes of CO2 as well as a proportionate amount of reduction in NOx and particulate matter.

Furthermore health is impacted by the noise produced during take-off and landing. 1,8 million European citizens are affected by aircraft noise above 55 Lden. Since for most of the EU airports the aircraft routing is the measure with the highest potential for noise exposure reduction[28], SES has a significant benefit potential. The gate-to gate phase ANS-related inefficiencies increased in 2011[29].

Figure 2-4: En-route flight efficiency

Figure 2-4 displays the development of the additional distance aircraft have to fly compared to the shortest route, corresponding to each aircraft flying an average of 42 km longer than strictly necessary, which is a major driver for unnecessary CO2 emissions. The grey shading shows the difference between the optimum and actually flown route, whilst the dotted and solid lines represent the difference between the route planned by the operator and the shortest route. The references to 30/40 Nautical Miles refer to how far from the departure/destination airport the calculation starts or ends. This is required as the departure and arrival phases involve a high amount of inevitable manoeuvring depending on runways used, weather conditions and other traffic.

Conclusion

The underlying reasons of unsatisfactory results of the SES outcomes in terms capacity improvements, ANS cost reduction and flight efficiency explained above are further analysed below.

Based on the above evidence, with illustrates the existence and scale of the core problems, two main problem areas which have hindered the planned outcomes: (a) insufficient efficiency of air navigation service provision (ANSP) and (b) a fragmented air traffic management system. These problems are interlinked, given that fragmentation is key reason for inefficiencies (and in essence the rationale of introducing the SES). However, there are other reasons for ANSP inefficiencies beyond the fragmentation.

Gaps in the existing legislation prevent adequate addressing these problem areas, as described in the following paragraphs.

2.1.1 Problem Area 1: Insufficient efficiency of Air Navigation Service provision

As explained above, the ANS provision[30] remains relatively inefficient in terms of cost- and flight efficiency as well as the capacity offered. Best way to prove this, is to compare Europe with other systems, the best basis for comparison being the United States, which covers similar size airspace with comparable number of air traffic control sectors and airports[31]. ANS in the US is organised as a centralised state-run service. A condensed overview of the differences of the European and US ATM systems related to performance and efficiency is provided in the table below.

Figure 2-5: Comparison of US/Europe key ATM system figures 2010[32]

Calendar Year 2010 || Europe || USA || Difference US vs Europe

Geographic Area (million km2) || 11.5 || 10.4 || ~ -10%

Number of en-route ANSPs || 38 || 1 ||

Number of ATCOs in operations || 16,700 || 14,600 || ~ -13%

Total staff || 57,000 || 35,200 || ~ -38%

Controlled flights (IFR), million || 9.5 || 15.9 || ~ +67%[33]

Share of flights to / from top 34 airports || 66% || 63% ||

Share of General Aviation || 4% || 23% || ~ x 5.5

Flight Hours controlled (million) || 13.8 || 23.4 || ~ +70%

Relative density (flight hours per km2) || 1.2 || 2.2 || ~ x 1.8

Average length of flight (within respective airspace) || 557 NM || 493 NM || ~ - 11%

Number of en-route centres || 63 || 20 || ~ -68%

Number of airports with ATC services || >450 || ~ 509 || ~ +13%

Of which are slot controlled || >90 || 3 ||

In the US, similarly sized en-route airspace is controlled by a single service provider as opposed to 38 service providers in Europe. The US service provider controls almost 70% more flights with 13% less air traffic controllers. Other significant conclusions to be drawn include that Europe has significantly more flights delayed with a higher delay per flight, aircraft fly more indirect routes and therefore the estimated benefit-potential available to service provision is significantly higher in Europe than in the US.

In addition, a comparison has also been made between Europe and New Zealand, Canada and the USA, which are all regions with similar air safety performance[34]. Figure 2-6 below gives an overview of the key efficiency ratios of ANS providers in these countries.

Figure 2-6: Indicators for cost-efficiency in 2010[35]

Cost-efficiency || European ANSPs || Airways New Zealand || NAV Canada || US FAA for 2010

Air Traffic Controller (ATCO)-hour productivity (in flight hours per ATCO-hour) || 0.77 || 0.55 || 1.01 || 1.01

ATCO employment costs per ATCO-hour (in €) || 96 || 59 || 84 || 72

ATCO employment costs per composite flight hour (in €) || 125 || 107 || 84 || 71

Total costs per composite flight hour (in €) || 419 || 281 || 259 || 321

Share of ATCO employment costs of the total costs per flight hour || 30% || 38%[36] || 32% || 22%

Employment costs between the different regions are not directly comparable due to the differences in social systems. However figures still allow assessing the share of employment cost in overall ANSP costs. The main message that can be derived from the table is that on the majority of cost-efficiency indicators, Europe performs worse than its foreign peers[37]. Total costs per flight hour are significantly larger than for the other three nations.

For the employment costs assessment a comparison between the European countries (see the figure below) is more relevant. Even considering the inherent differences in salary levels between the "new" and "old" member states, discrepancies are significant and indicate existence of important performance gaps between the ANSPs.

Figure 2‑7: Average unit staff costs per air traffic control officer in operational service/hours on duty (EUR/hour)

This variation in ANSPs cost differences becomes particularly revealing if it is reflected against the number of working days in each State, as the amount of days worked varies equally starkly and the resulting comparison bears no correlation with local living costs, but more with bargaining power or historical reasons.

Figure 2-8: Staff costs per air traffic controller/working day

In particular as regards Figure 2-8, it should be noted that employment cost as such is not a problem – quite in the contrary as a wealthy population is good for the economy – but the productivity achieved with that employment cost is what drives the value-added of the ATM system. Overall the stakeholders consider the performance and cost efficiency of service provision as of being a high relevance, although views of different groups were highly divergent.

Figure 2‑9: Response to relevance of attributing more focus to reducing costs to airspace users

The airlines were unanimous in considering this of high relevance and even the ANSPs (more than regulators NSAs) attributed considerable relevance to that statement. It appears that SES has so far retained too much of the status quo, instead of focusing on the value added for airspace users.

Key reason for comparative inefficiencies is of course fragmentation of the European airspace. However, there are also other reasons why, despite the de-fragmentation efforts the inefficiency of the ANSPs has not improved as much as expected, in particular this concerns the gaps in ANSP performance and shortcomings in setting up and enforcing the performance scheme. The SES I and in particular SES II initiatives have attempted to mitigate these root causes, but progress has been less rapid than expected, for reasons explained in the next sub-chapters.

2.1.1.1 The gaps in ANSP performance

Root cause: ANSPs are to a great extent natural monopolies

The business model on which ANS provision is based and the related operational decisions impact significantly the efficiency of different national ANSPs. The provision of ANS in Europe is still based on national sovereign airspace and dominated by the national monopoly service providers as designated by state, often for long period of time. There is lack of motivation for ANSPs to improve their performance as they are not conditioned to market mechanisms. Only one major service provider[38] can be considered to operate mostly as private enterprise. Much of the time ATM is seen as a public service despite moves towards corporatisation.

Currently the air navigation services can be provided as packaged services consisting of (a) the core services, such as air traffic control and alerting or urgency services and (b) support services[39] such as meteorological services, aeronautical information services, training as well as various communication, navigation and surveillance services. The highly specific nature and the technological situation of the core services make these natural monopolies, therefore making it difficult to introduce true market mechanisms. Provision of support services is more flexible by their nature and use of market principles could be considered to push for better performance and efficiency. Current regulations expressly allow and even recommend[40] provision of the support services as separate unbundled entities, but only two relatively small cases[41] are known Europe-wide of such unbundling. But current rules do not provide guidance on how such unbundling should be carried out.

The table below indicates that the share of costs for air traffic management is slowly decreasing while the share of communication/navigation and surveillance service costs is stable and the share of costs for aeronautical information and meteorological services is increasing.

Figure 2‑10: ANS costs by service; share of total costs, 2009-2013

|| 2009 (Actual) || 2010 (Actual) || 2011 (Actual) || 2012 (Forecast) || 2013 (Forecast)

Air traffic management || 72.6% || 71.2% || 71.5% || 71.3% || 71.0%

Communication, navigation, surveillance || 19.2% || 18.1% || 18.4% || 18.1% || 18.3%

Aeronautical information || 2.3% || 3.1% || 3.2% || 3.1% || 3.2%

Meteorological services || 4.4% || 5.7% || 5.6% || 6.0% || 6.0%

Other costs || 1.5% || 1.9% || 1.3% || 1.5% || 1.5%

Source: PRB[42]

The cost of the support services is also what differentiates European service providers from their counterparts elsewhere. For example, whilst the difference in the number of air traffic controllers between the Europe and the US is relatively small, the total staff of the US ANS provider is almost 40% lower than in Europe. The latter implies that Europe has a relatively higher number of staff linked to support services. Therefore efficiency in proving these support services is an important factor in improving overall performance and efficiency of ANS provision.

Many of the support services are expected to face substantial technological change in the near future through the SESAR project, which would fundamentally change the provision of ANS. Therefore, it is especially relevant to reconsider the way the provision of support services is organised.

The airlines, airport operators and manufacturing industries stressed in the consultation the need to change the old business models in order to optimise the service provision, while the service providers, ministries, and about half of the NSAs see this as an issue of lover importance. Trade unions are strongly opposed.

Root cause: ANSP operations lack customer focus

As ANSPs operate in a de facto monopoly environment, there has been little incentive to focus on customer needs. Vis-à-vis their customers the ANSPs operate always in a monopoly situation. In these circumstances the main tool under the current legal framework for ensuring communication between the ANSPs and operators is an on-going consultation process on service provision. Transparency in reporting and consultation with stakeholders should be basic business practice and is fundamental to the performance based approach that underpins the SES. However airlines and other airspace users are not satisfied with the quality of consultation in some Member States:

· while all ANSPs consult on their investment programme, the level of detail varies significantly;

· while users would prefer to receive information covering medium term plans, ANSPs are finding it difficult to commit to longer term plans given the volatility in traffic demand.

Of course, consultation is not a one way street. Whilst the regulations impose requirements on the ANSP/NSA, the airlines are also responsible for the quality of consultation. Part of improving consultation may be for the users to be more pro-active in the consultation process.

Current rules prescribe consultation, but not the depth and breadth of that interaction. Overall, it appears that providing more detail of the necessary format and procedures of consultation could help to improve consultation practices. Consultation could also vary in its level of influence from pure advisory to participating in decision-making.

As expected, the airlines and the manufacturing industries find customer focus to be more vital than service providers and NSAs. But also the latter considered that there are matters to be improved.

Root cause: Ineffective regulatory role of NSAs

The intention to set out rules for the establishment of National Supervisory Authorities (NSA) within SES was for Member States to establish effective, fully-resourced supervisory bodies, independent of service-provision and capable of supervising safety and service provision activities. In the context of the Performance Scheme[43], NSAs play a key role through the elaboration of performance plans, performance oversight, target settings and their monitoring. The key to efficiency in these tasks is that the supervisory functions are separated from the service-provision being supervised. However due to a political compromise made in 2003, the separation is required only at functional level under the SES rules. This creates a problem for true independence as has been recently witnessed in EASA audit results (see below for examples).

A principal aspect of independence is the adequate funding and resourcing of NSAs which, in turn, directly affect NSA effectiveness. Member States are responsible for ensuring that NSAs have sufficient resources and capabilities to perform their tasks. Clearly some States are having difficulties in making the necessary resources and expertise available. Even though the SES legislation allows NSAs to recover their costs via route charges, the NSAs do not always have the power or independence to enforce this. Consequently, across Europe, the institutional and financial situation of NSAs is mixed and there exists a large variation in NSA oversight capabilities as shown by the self-reporting systems and discussions from the NSA co-ordination platform and the initial audits.

The task force of the NSA coordination platform[44] concluded that some States have difficulties in addressing the independency issue adequately since the separation from ANSP is only required functionally. There are a total of 37 NSAs in the 29 SES States (a number of States have a small separate NSA e.g. to oversee meteorological services). In four States the main NSA is functionally separated and in four other States the main NSA is fully separated, but either MET or AIS NSA is functionally separated[45], while the rest of NSAs have more complete institutional or organisational separation. However, even when being institutionally separated from the ANSPs, already the first EASA audits show that a number of NSAs suffer from a lack of real independence.

The first few audits performed by EASA on the Member States authorities have confirmed what was previously noted based on anecdotal evidence - the authorities are sometimes in dire financial troubles and lack both expertise and enforcement powers. NSAs are sometimes also uncomfortably close to the ANSPs that they are supposed to oversee. Typically in the discussion in the Single Sky Committee concerning ANSP performance targets, the Member States almost invariably tend to defend their ANSPs against the interests of the airspace users that pay for the system. From EASA audits[46] of five NSAs in 2012, a larger number of different shortcomings were noted, including the following examples:

· Entire staff of NSA on detachment from the ANSP to be overseen;

· Total NSA staff less than 20% of the numbers assessed to be required in founding decision;

· Director of NSA reporting to the highest accountable person of the ANSP;

· The ANSP itself issuing air traffic controller licenses to its staff;

· Service provision allowed without a valid certificate;

· NSA lacking powers to inspect ANSP premises.

The IA support study concluded in addition that:

· Independence should be also considered vis-à-vis other government bodies. In cases where NSAs report to the Transport Ministry, their position is more likely to be influenced by political interests rather than operational efficiency considerations.

· The relative influence of NSAs and ANSPs sometimes hurts NSAs - ANSPs are often designated by a government decree or similar which puts them sometimes higher in the hierarchy than the NSAs.

Apart from issues of conflict of interests, NSAs have not always developed sufficient expertise in ANS and are therefore at a disadvantage in developing performance plans.

Airlines indicated during the consultation that there is often no independent oversight by the NSA. At the same time it should be noted that NSAs themselves do not agree that persistent resource problems would have caused problems with ensuring sufficient oversight, and only a small number of stakeholders "fully agree" that NSAs lack the required resources to do their job efficiently.

In conclusion, optimising the performance of ANSPs requires strong oversight capabilities. Where NSAs are not effective and powerful enough, the ANSPs are not pressured and motivated to provide more efficient services.

2.1.1.2 Shortcomings in setting up and enforcing the performance scheme

Root cause: Inefficient governance mechanism for setting up and enforcing the performance scheme

The SES II Performance Scheme[47] aims to improve the overall efficiency and performance of air navigation services through a system of binding performance targets. Currently, these targets are adopted by Commission decision through comitology procedure with qualified majority voting by Member States. But this still leaves a few large Member States with the possibility to block ambitious target setting and thereby protect their state-owned service providers from change.

Box 2‑1: Performance scheme arrangements

Performance targets are set at EU level in the areas of cost-efficiency, capacity, safety and environment. Subsequently, Member States have to prepare performance plans and set local targets that should be consistent with the agreed EU-wide target. Incentives may be used by the States to further motivate reaching and exceeding the national targets. The Performance Review Body (PRB), which supports the Commission in the implementation of the performance scheme, is required to exhibit the necessary competencies and impartiality to provide expertise, recommendations and general support to the Commission and Member States. Eurocontrol has been designated as PRB until June 2015 and is supported by the performance review unit (PRU).

The performance scheme operates over different reference periods, e.g. the first reference period (RP1) covers the years 2012-2014 The Member States approve in the Single Sky Committee (SSC) the EU-wide targets which the Commission has proposed on the basis of PRB recommendations. At the national level, the NSAs are responsible for determining performance targets consistent with the EU-wide targets. If necessary the Commission may recommend revisions of targets if they are inconsistent with the EU targets. The final decision on targets rests with the SSC.

When the national targets are agreed, the ANSPs are responsible for adapting their business plans to deliver the targets. This will be checked by the NSAs, Commission and the PRB. As demonstrated in the box above, the entire scheme is based on a system of checks and balances between the various players – the Commission, PRB, Member States/the Single Sky Committee (SSC), NSAs and ANSPs. Stakeholders have further emphasised that it is necessary to respect the expert and industry views in setting ambitious, simple and achievable targets.

Following the assessments of the initial national performance plans for reference period 1 (RP1), the Commission found 20 States falling short on the cost efficiency targets and 10 States on capacity. Initially this shortfall amounted to a total of € 1.17 billion of additional cost over the EU targets, with a gap in respect to the cost-efficiency target evaluated at € 256 million over RP1 and € 922 million in additional delay costs (see Box 2-2 below). Member States revised their initial performance plans, however, there was a significant difference between the individual contributions of Member States to close the identified gaps. A decision was finally made to accept the revised performance plans even though the EU target was not fully met. This was based on the view that a lot had been achieved in the first reference period, relatively little could be obtained partly due to significant changes in underlying traffic forecasts, and the cooperation of Member States was needed in adopting the plans.

Box 2‑2: The progression of target setting for cost efficiency and capacity in RP1

Cost efficiency The following table compares the EU target and the values achieved through the performance plans: || EU average determined unit rate (€)

|| 2012 || 2013 || 2014

(a) EU target / reference values || 57.88 || 55.87 || 53.92

(b) First round of performance planning || 58.08 || 57.04 || 55.22

(c) Second round of performance planning (accepted targets) || 57.73 || 56.68 || 54.83

(d) Difference (c) – (a) || -0.15 || 0.81 || 0.91

% (d) / (a) || -0.3% || 1.4% || 1.7%

The impact of the shortfall (d) is estimated by the PRU to be €189 million over RP1 (2012-14). Before the revised plans, the impact was € 256 million. I.e. the intervention of the revised planning could be said to benefit the industry by € 67 million, if these values were achieved.

Capacity

Average en route Air Traffic Flow Management (ATFM) delay was 1.1 minutes per flight in 2011, down from 2.0 minutes in 2010 and 1.0 minute in 2009. (Network Manager Annual Network Operations Report 2011.). The following table compares the EU target and the values achieved through the performance plans:

|| Minutes of delay per flight

|| 2012 || 2013 || 2014

(a) EU target / reference values || 0.7 || 0.6 || 0.5

(b) First round of performance planning || 1.18 || 1.04 || 0.76

(c) Second round of performance planning (accepted targets) || 1.07 || 1.0 || 0.67

(d) Difference (c) – (a) || 0.37 || 0.4 || 0.17

The impact of the shortfall (d) is estimated by the PRU to be € 734 million over RP1 (2012-14). Before the revised plans, the impact was € 922 million. I.e. the intervention of the revised planning could be said to benefit the industry by € 188 million, if these values were achieved.

Main weaknesses in the current governance mechanism seems to be that it is not yet effective enough in (a) avoiding conflicts of interests and (b) ensuring availability of necessary expertise and information.

Conflicts of interest

The key requirement for the scheme is independence between PRB/PRU, NSAs, Member States and ANSPs. In particular the success of the performance scheme relies significantly on the NSA/ANSP interaction. But, as already mentioned above, NSAs are not always fully independent from ANSPs.

This is likely to lead to a sub-optimally lower ambition in performance plans.

From the first regulatory period, it can be concluded that there has been insufficient independence and impartiality in the process as:

· NSAs do not challenge their ANSPs; and many Member States defend their positions in the SSC as if they were national ANSPs (and some try to include ANSPs in their delegations).

· SSC members actively seek to minimise targets in the target setting process in defence of their national ANSPs – they see their task as maintaining ANSP revenues, avoiding the risk of loss of employment, impact on national budgets and/or risk of industrial action.

· At each stage the SSC remains in a decisive role – thus far we have seen that SSC members have argued for lower EU level targets, and have subsequently resisted moves for performance plans to be fully consistent with the EU targets, and against action against Member States that have not delivered on this.

Lack of expertise and asymmetry of information

Given the lack of resources, NSAs are often forced to rely on the same ANSPs for expertise that the NSA is intended to oversee. The PRU is restricted to advising on factual comparisons and forward projections, whereas the NSA should be looking deeper into ANSP business plans to make judgements on the level of challenge and feasibility of the proposed ANSP business plan. There exists also asymmetry of information between the PRB and NSAs/Member States and the ANSPs. This means that the PRB has only high-level information on which to challenge ANSPs and no insight into their detailed business plans. As a result, the ANSPs are well placed to exert undue influence over their performance targets.

In conclusion, the SES framework requires much stronger implementation and enforcement of the performance scheme by Member States in particular. Measures to ensure the independence, resources and expertise of the key players – particularly the NSAs - are needed to ensure that performance targets are both meaningful and properly enforced.

2.1.2 Problem Area 2: A fragmented ATM system

The European ATM system consists of 27 national authorities overseeing over a hundred ANSPs (counting en-route and local), with the associated variance in systems, rules and procedures. Each Member State has at least one Area Control Centre (ACC) and many aerodrome control facilities. As they are set up on a national basis, Area Control Centres are often inefficiently small. Other comparable regions have one consistent feature - a single ANSP, overseen and regulated by a single authority. Eurocontrol commissioned a study in 2006 to research the impact of fragmentation on the efficiency of the European ATM system.

Figure 2‑11: Cost of fragmentation in European ATM systems[48], [49]

The table above gives an overview of the additional costs caused by the fact that Europe has a large number of service providers, each procuring their own systems, mostly training their own staff, creating their own operating procedures and being limited territorially to providing services in a small airspace. In addition to cost-inefficiencies, fragmentation has a negative impact on mobility of staff and flexibility of service. Reducing these inefficiencies has been the core idea of SES. Actions to this end are taken at 2 levels (a) modus operandi of national ANSP is step by step harmonised so that the existing network of providers would function as if it was a single provider and (b) new supranational structures, such as cross-border Functional Air Blocks (FABs) and EU Network Manager have been created and gradually exploited.

However, the results of both FABs and Network Manager do not yet meet the expectations placed on them by the legislation.

2.1.2.1 Performance of the FABs is not meeting expectations

Root cause: FABs are not performance driven - insufficient value-added of the current scheme

Over time there have been several attempts to reduce fragmentation and in fact the original intention when the Eurocontrol organisation was created in 1963, was that it would take over service provision in the upper airspace of all its contracting parties. This idea was resurrected again with SES I, but like in the 1960's, the Member States rejected more radical top down ideas e.g. to have a single airspace controlled by a single provider. So FABs were considered a key tool of SES I and SES II for facilitating a co-operative regional approach to planning and operation of the ATM system with the goal of reducing fragmentation and costs of service. In 2009, with SES II, FABs were redefined in the service provision regulation as arrangements based on operational requirements and established regardless of State boundaries[50]. The FABs were expected to help on performance and in particular to:

· improve airspace efficiency by reducing airspace fragmentation by adopting cooperative approach;

· consolidate service provision leading to savings in operational costs;

· rationalise support services and facilitate system harmonisation;

· rationalise infrastructure procurement and utilisation;

· achieve technical interoperability leading to better safety, mobility and lower costs.

According to the FAB plans made in 2008, about half of the FABs should have been operational in the sense of optimising airspace and services by 2013. To speed up development a 4 December 2012 deadline was included in SES. However, in reality, despite the firm legal deadline, the situation has not improved markedly and is in fact worse lagging behind even the 2008 plans. Even assuming "operational" is understood just as delivery of services consistent with the FAB implementation plan, only the UK-Ireland FAB is largely on track.

Even for the UK-Ireland FAB, the concrete benefits to airspace users have been minimal and could possibly have been achieved without the FAB as well. At the time of writing, the Commission is in the process of pursuing pre-infringement procedures against the Member States for failing to implement the FABs, but that alone will clearly not be enough to rectify the situation – there are plainly difficulties in delivering operational benefits. The infringement procedures will take considerable time and will in any case only force States towards formal compliance with the existing rules, whilst what is needed are innovative ways of rearranging service provision through industrial co-operation so that performance would be maximised.

There have been many different reasons as to why the FABs have failed to deliver:

· Airspace optimisation was originally considered a major benefit of FABs, however resolving sovereignty issues and associated liability questions, and developing State and NSA level agreements has been slow. Furthermore, the majority of FABs are two-State arrangements, thus the potential to realise airspace design efficiencies has been limited.

· Many of the cost-benefit analyses conducted for FABs appear to have been overly optimistic about benefits and lacking in risk analysis, eventually leading to serious delays exemplified by the fact that all but one of the FABs are still considered non-operational.

· All FABs have produced plans, however many of these are essentially statements of intent without necessary detail for operation or specific actions. There are few identifiable joint projects that could suggest that most FABs are imminently going to become "operational".

· Effectiveness of FAB internal governance is questionable as the requirement of unanimity waters down ambition.

· Support services have been identified by FABs as an area of potential rationalisation. However, beyond the few commercial arrangements whereby one ANSP provides training services for another, little has been done here.

· FABs expected savings to come from joint infrastructure projects. However, two key issues hindering progress here are often a lack of commonality in equipment between the neighbouring States that have formed FABs and/or differences in system age making synchronisation of development plans costly.

· Whilst it could be said that the FABs have not yet had time to deliver due to the delays in FAB-projects, it is evident from the plans that in any case, their contribution to defragmentation would not have been at the level expected and required for reaching the overall SES targets.

As a result FABs have thus far been primarily exercises in regulatory compliance and have suffered from a lack of strategic and operational vision. This is also evidenced by the fact that some service providers[51] are establishing business co-operation arrangements that go across FAB boundaries. As such it is a positive sign that ANSPs are looking creatively for synergies, but this trend suggests less than full confidence that the established FABs will provide the natural home for such arrangements. Therefore it needs to be also examined whether the basic assumptions behind FABs were wrong, or whether their implementation has been flawed to the extent that we are not seeing the expected gains.

Stakeholders find that FABs do not effectively comply with the legal obligations and do not yet deliver the expected benefits. Service providers have commented that FABs need a stronger institutional framework and a common management system. The majority of the stakeholders (most of them the service providers and professional associations) feel that FABs should be increasingly focused on functionality and a flexible search of synergies.

2.1.2.2 Performance of the Network Manager is not meeting expectations

Root cause: Weak role and limited scope of the Network Manager

One of the major innovations in SES II was the creation of a Network Manager entity to cover certain functions that were deemed to be best carried out at network level as opposed to FAB or national levels. The initial operating scope of the Network Manager covered the following four functions[52]:

1. Air Traffic Flow Management (ATFM), which processes flight plans filed by aircraft operators and plans the high level traffic flows in Europe. The aim was to avoid demand peaks that exceed the capability of the ANSPs to deliver service safely and efficiently.

2. Route design, which aims to design the routes used by aircraft based on the traffic needs, as opposed to national ANSP or political considerations.

3. Co-ordination of radio frequencies amongst the thousands of stations using aviation bands.

4. Co-ordination of radar transponder codes to rationalise the use of this scarce technical resource so that the radar systems can differentiate between all aircraft.

But these were only the initial ideas, and now that SESAR is moving into its deployment stage, new concepts such as 4D trajectory management of traffic flows or System Wide Information Management (SWIM) have been validated[53] and need to be implemented.

Eurocontrol, who has been designated as the Network Manager, has done a good job in getting the new system off the ground. However, all of these Network Management functions are to be delivered using a co-operative decision making process involving the States, ANSPs and the various airspace user groups (airlines, military, general and business aviation). Whilst the intention was to create a strong industry governance for the Network Manager leading to clear executive powers, the Network Manager effectively does not have any competence to impose its decisions on the States. In practise the ANSPs may choose to disregard the Network Manager in their actions. Furthermore if the Network Manager's actions are blocked by ANSPs, conflict resolution is envisaged to take place in the Single Sky Committee, with an obvious conflict of interest given that Member States tend to reflect ANSP views. Hence under the current legal framework, decision making by the Network Manager has tended to aim at consensus with the inevitable result of often weak compromises.

The oversight of the Network Manager has been entrusted to EASA who has remarked on the shortcomings of the governance system and the consequent difficulty in reaching many important decisions. Furthermore the study performed to support this impact assessment pointed to a number of other problems which – despite some good progress - hamper the Network Manager from reaching its full potential:

· Whilst the Network Manager is involved in basic route design, the ANSPs and FABs have often not embraced its capabilities fully and have not included in their development plans measures against sub-optimal cross-border sectorisation and associated routings.

· Network Manager is reliant on the ANSPs/FABs producing their deployment plans, but there is no independent review to ensure the plans will be timely and effective.

· The FABs do not actively involve the Network Manager in their planning and implementation processes.

· The States may choose to ignore the planning especially in the area of managing scarce resources, such as radio frequencies or transponder codes.

In conclusion, the study has assessed the Network Manager concept to be useful[54], but the actual implementation is being weakened by ineffective relationship between the Network Manager and ANSPs/airspace users. In addition, its operations cover only a subset of the total picture needed for performance optimisation under the future SESAR umbrella, which changes technology infrastructure considerably.

2.1.3 Conclusion

Figure 2-12 is presenting the interconnection of the problems, drivers and their root causes analysed in this chapter.

Figure 2‑12: Problems, drivers and root causes

2.2 The most affected stakeholders

This initiative affects the Member States (NSAs and other authorities) which are responsible for supervising and arranging ANS provision, and Air Navigation Service Providers and their staff who need to adjust their operations to meet the better performance objectives. It also affects airspace users (airlines, military and business and general aviation) who shall benefit from the efficiency gains and congestion reduction. The Commission and EASA and their staff will be affected if the governance structures linked to the SES implementation are to be revised. Indirectly the initiative affects aerodrome operators, passengers and those who use air freight services. Finally, new operators with a potential to enter the market for ANSP support services', could benefit from new business opportunities.

2.3 Baseline scenario

The assessment of possible future developments in case of the baseline scenario (i.e. continuation of implementing existing SES framework) demonstrates that despite some progress, the goals of SES by 2020 will not be achieved. For example the most recent PRB data indicates that even if the current targets are reached (unlikely on current projection) we will only cut the en-route unit rate[55] from the current € 57.4 to € 48.8 by the end of 2019 – a far cry from the SES overall target or halving the costs.

Baseline developments of the individual problem drivers are discussed below[56].

Gaps in ANSP performance

Improvement of European ANSP performance would continue, but relatively slowly retaining the wide performance gap between Europe and other world regions. Furthermore, as demonstrated by the rise in delays during the minor recovery of 2010-2011[57], the offer of services will not be able to keep up with the post-crisis demand increase, so capacity problems would increase. Technological developments[58] would gradually push the ANSPs towards new operational approaches and some Member States could decide to organise provision of ANSP support services on a competitive basis. However even at best, progress will be incremental and uneven.

ANSPs continue of being to the great extent natural monopolies. Although possible, it appears unlikely that the States will undertake such moves any more than they have done since 2004, unless external pressure is available. There are also presently no signs that the performance scheme would be causing ANSPs to re-think how support services could be made more efficient.

As regards customer focus, the regulations already impose a requirement for extensive reporting of plans, for monitoring and reporting[59] of performance, and involvement of key stakeholders in regular consultation. Member States have established mechanisms for consultation and ANSPs continue to use them, but the improvement of the effectiveness of the process across the board is far from certain. According to the airspace users' comments, there is a major gap between informing users and taking their needs on-board. In theory the performance scheme should reflect users’ interests via effective use of consultation, in practice consultation has had a little effect on the targets levels.

It is expected that the respective roles of NSA and ANSP, as supervisor and supervised, would become progressively better defined and implemented, supported by the discussion forum set up at European level (i.e. the NSA co-ordination platform). Developments in technology could help this process, e.g. by improving availability of safety data and analysis, thus enabling better oversight on European and sub-regional basis (provided the NSAs would agree to translate and share that information). Inadequate levels of funding and independence could be mitigated to some extent after EASA audits of every NSA and subsequent corrective actions or infringement procedures. But without full separation of NSA and ANSP as required under the EU law, this additional resourcing of NSAs would be likely to come from the ANSPs, which could exaggerate conflicts of interests. In any case, inadequate resourcing continues to be a barrier to full and effective NSA operation, not only in terms of manpower but also technical skills and independence. NSAs could start using the opportunity to recover their costs via the route charges or gain enhanced independence by more radical separation from ANSPs, but we have no indications of this. The resource constraints would continue to limit the ability of NSAs to focus more on cross-border service-provision, both bi-laterally and in the FAB context. The implementation of rules would continue to be patchy, and could even lead to safety risks and certainly to a delay in the deployment of SESAR programme. On the other hand, the continued affinity to the entities being overseen keeps the ambition performance levels low and prevents the high-level SES targets being met.

Shortcomings in the setting up and enforcing of the performance scheme

It is expected that under the baseline scenario for the new reference period (RP2 to be started in 2015, RP3 to be started 2020) the targets will follow the trendline of RP1's moderate results:

· The PRB and PRU may be subject to continued pressure from the industry. The downwards pressure may even increase where shortcuts in RP1 (such as deferred investment) need to be addressed in RP2.

· The "lowest common denominator target" would be agreed by the Single Sky Committee. Overall, in discussing the matter with the Commission, the PRB has estimated that the cost efficiency targets could have been an additional 1-2 percentage points higher in ambition than actually achieved in RP1.

· Pressure to have looser delay targets if traffic is recovering, due to insufficient investment throughout RP1.

Performance of the FABs is not meeting expectations

The baseline assumes that the FABs have not had sufficient time, incentives and motivation to implement changes. Accordingly their slow and uneven development continues, mostly driven by the impetus to be provided to FABs by the RP2 in the performance scheme. Under the current legal framework[60] the Commission cannot incentivise progress during the implementation phase by establishing explicit compliance criteria or firm deadlines. In any case, the progress will be slow and fundamental impediments linked to lack of flexibility, expertise and funding would remain.

Performance of the Network Manager is not meeting expectations

The Network Manager is still evolving from its original mandate to include functions that underpin its mission, thus the baseline should recognise the potential for some further evolution. The Network Manager has achieved already some success in operational coordination, but it has been less effective in enforcement and in creating a more strategic partnership with stakeholders, in particular with ANSPs. In the baseline a lack of clarity remains as to what extent the Network Manager can become involved in ANSP and FAB planning. There are also concerns that FABs are developing their own flow management functions duplicating the central Network Manager functions. To avoid this, more effective authority has to be vested with the Network Manager. Finally, in line with its initial legal basis, a number of functions have been left outside the Network Manager, although they could benefit from common co-ordination at network level. This could mean that in the future some new SESAR related functions[61] would be orphaned and perhaps run sub-optimally in a duplicated environment.

The above developments should provide some overall positive results. The performance scheme should continue to deliver a modest, but reasonably steady stream of improvements, particularly if we see modest traffic increases. However a return to the strong traffic growth of last decades[62] would quickly change that situation and expose the underlying capacity problems whilst the costs remain stubbornly high. Therefore the Commission should be prepared to consider further action to achieve progress that can not only improve the system at moderate growth levels, but also future-proofs it for a return to past growth rates.

2.4 Subsidiarity 2.4.1 Legal basis

Articles 58, 90 and 100 of the Treaty extend to air transport the objectives of internal market in the context of a Common EU Transport Policy.

2.4.2 Necessity and EU added value

Actions by Member States alone cannot ensure the optimal building of capacity and safety, whilst assuring reductions in the cost levels of EU air traffic management services. The core idea of the SES – shifting airspace management from national level to the EU level to benefit from scale efficiencies and overcome the administrative and technical barriers created by the legacy of national approaches – predetermines the need of intervention at the EU level. Already in agreeing to the SES I and SES II packages, the Member States acknowledged that the continuing application of national rules and sub-optimal functioning of national institutions is in fact at the centre of the problem.

SES II+ initiative aims to ensure consistent implementation of the existing EU air traffic acquis and by so doing enable airspace users to benefit from a single consolidated legislative, operational and R&D framework and to face predictable business conditions throughout the EU. This should lead to creation of a Single European Sky and improve the competitiveness of European aviation sector.

3 Objectives 3.1 General objective

The 2011 White Paper for Transport emphasised the need to achieve a truly seamless Single European Sky by establishing the appropriate legal and financial framework to support it and by consolidating the relationship between the European Union and Eurocontrol, noting in addition that improving the efficiency of aircraft and traffic management should secure a competitive advantage on top of reducing emissions.

The general objective: Improve the competitiveness of the European aviation system vis-á-vis other comparable regions, and in particular developing further the Single European Sky initiative, which implies de-fragmenting the European airspace, reducing delays, increasing safety standards and flight efficiency as to reduce the environmental footprint of aviation and the costs related to service provision.

The development of the Single European Sky (SES) initiative has included two comprehensive regulatory packages – SES I and SES II – and a number of related implementing rules. The purpose of this SES 2+ initiative is to fine tune and finalise some elements of the SES II package, but retain the same high-level policy objectives and choices as were agreed to by the Member States in 2009 and again stated in the 2011 communication[63]. SES 2+ also forms part of the SMA initiative striving to improve competitiveness and enhance growth in the internal market.

Stakeholders see a need for a single rulemaking and a common planning framework at the EU level, while eliminating any gaps and overlaps of the work in the different organisations.

Competitiveness of the European ATM system is important for the EU airlines. Although ATM forms only between 5-10% of the total cost-base of the airlines, the estimated existing inefficiencies in the current system are great enough to make for many airlines the difference of breaking back into profit from the current loss-making situation. Moreover the inefficiency of European ATM gives third-country airlines a competitive advantage over European airlines. Many of the biggest competitors of European airlines fly mostly in airspaces, where costs are lower and ATM service provision is more efficient, thus allowing them to operate in large part of their business with higher margins.

3.2 Specific objectives

The general objective has been translated into specific and operational objectives attributed to the two problem areas: (a) insufficient efficiency of ANS provision and (b) a fragmented ATM system.

SO1: Improve performance of Air Traffic Services in terms of efficiency

SO2: Improve utilisation of air traffic management capacity

The efficiency of service provision and airspace use is seen as a relevant issue by stakeholders, especially by the ANSPs, the airlines, the airport operators and the manufacturing industries. Low relevance of this is mostly reported by trade unions and professional associations.

3.3 Operational objectives

The following operational objectives have been identified in order to address the problem drivers identified in the previous chapter:

OO1: Ensure that the provision of Air Navigation Services is transparent, based on market principles and customer value.

OO2: Strengthen the role of the National Supervisory Authorities

OO3: Strengthen the process of setting up targets and enforcing the performance scheme (including the reinforcement of the Performance Review Body/Performance Review Unit (PRB/PRU)

OO4: Strategic redirection of FABs

OO5: Strengthen the governance and operational scope of the Network Manager

The operational objectives are more consistently supported by operators and manufacturing industry, while the views of NSAs, states and ANSPs are mixed. Improving the governance of the performance scheme is not perceived to be very relevant by a large share of these stakeholders. While almost all stakeholders consider it highly relevant that FABs focus increasingly on functionality and flexible search of synergies, most of them do not agree with the need of beefing up the functions of the Network Manager.

The specific and operational objectives are linked to the identified problems and drivers as follows:

Figure 3-1: Problems, drivers, root causes and objectives

3.4 Coherence with other horizontal policies

SES II+ aims to support meeting the objectives of the renewed policy agenda outlined in the Europe 2020 Strategy and the 2011 White Paper for Transport. Transport infrastructure is being considered as the backbone of the internal market and this objective has been retained as one of the "Twelve levers to boost growth and strengthen confidence" in the Single Market Act II, which was adopted by the Commission in October 2012.

4 Policy options 4.1 Identification of possible policy options

The problem definition identified two main problem areas to be addressed to improve the performance of ANSPs in Europe – efficiency of service provisions and fragmentation of ATM systems. Chapter 2 above identified for problem are a series of drivers and root causes.

The analysis of the Commission and of the external consultants as well as the stakeholder consultation have helped to identify a broad set of measures in six policy domains having the potential to address all the problem drivers described above. The table below demonstrates the link between the root causes of the problems and different categories of options, while the content of each option is provided in the next chapter. In chapter 6 the analysis is taken a step forward by proposing and analysing the global policy scenarios combining options from all categories.

Figure 4-1: Overview table of root causes and corresponding options

Root cause to problem areas || Respective policy domains || Policy options considered

Problem Area 1: Insufficient efficiency of Air Navigation Service provision

Integrated structures and lack of market mechanisms || 1: Support services || 1.1 – Do nothing

1.2 – Functional separation of support services

1.3 – Structural separation of support services

ANSPs operations lack customer focus || 2: Focusing ANSPs on customer needs || 2.1 – Do nothing.

2.2 – Improved consultation and sign-off of some investment plans by airspace users.

2.3 – 2.2 + giving the airspace users groups a stronger seat in the ANSP governance

Ineffective regulatory role of NSAs || 3: Ineffective role of NSAs || 3.1 – Do nothing.

3.2 – Introduce mutual co-operation and EU-level co-ordination and pooling of experts

3.3 – 3.2+ institutional separation of NSAs from the ANSPs

Inefficient governance mechanism for setting up and enforcing the performance scheme || 4: Performance scheme governance mechanism || 4.1 – Do nothing.

4.2 – Reduced Member State involvement in the target setting process

4.3 – Allow direct nomination of the PRB by Member States, but let the PRB set targets directly without comitology

Problem Area 2: A fragmented ATM system

FABs are not performance driven, insufficient value added of the current setup || 5: Refocusing of FABs || 5.1 – Do nothing

5.2 – Create more prescriptive and enforceable targets/criteria for FABs

5.3 – Creation of a more flexible and performance driven FAB-model

5.4 – Top-down approach with a new entity created from the Network Manager to design service provision

Weak role of the Network Manager || 6: The role of the network manager || 6.1 – Do nothing

6.2 – Move operational governance to industry and simplify EU and State governance of strategic matters

6.3 – Create a joint undertaking of the industry to operate the Network Manager

6.4 – As option 6.2 or 6.3, but with a role for Eurocontrol built around the Network Manager and a more comprehensive centralised service provider and including also airspace design in broad sense

4.2 Policy options 1: Support services

Option 1.1 – Do nothing.

This option is to retain the existing arrangements, allowing the various ANS to be bundled into a single service provider, which under Articles 8 and 9 of Regulation 550/2004 can then be designated without application of normal public procurement rules, or any calls for tenders or related assessment of relative advantages. This option expects that any rationalisation will be driven by the performance scheme, the FABs and SESAR, but this will happen over an extended timeframe.

Option 1.2 – Functional separation of support services

This option requires ANSPs to organise the provision of support services internally in such a manner that they can be clearly distinguished as a single business unit. The separate business units must have separate accounts (i.e. their own balance sheets and profit/loss accounts), with cross functional charges clearly identified.

Option 1.3 – Structural separation of support services

In this option there is a structural separation of the support services from the core services. The assets and staff required for support service provision are transferred into a separate organisation which is independent from the core air traffic control (ATC) service provider. Resulting from this, the possibility for Member States to designate these support service providers is abolished as they can no longer be bundled together with the core service and only the core services can be designated. This makes the support services subject to European public procurement rules.

Stakeholder views: When it comes to introducing separation of support services from the core services and opening the market, the trade unions and professional associations are strongly opposed. On the other hand, the airlines fully support the idea, while the majority of the service providers agree to some extent[64]. Major political opposition could rise in certain States regarding the structural separation of support services as it also involves a considerable risk of industrial disturbances. On the other hand bilateral discussion have shown widespread support for the long term effects as structural separation enables a true market to be created and hence it creates maximal focus on cost of services and transparency of technical support costs as services are tendered through an open process.

4.3 Policy options 2: Focusing ANSPs on customer needs

Option 2.1 – Do nothing.

As always, this option complies with the baseline scenario. Whilst certain amount of consultation of stakeholders would continue to take place under the current rules, there would be no clear requirement as to the extent and depth of that involvement.

Option 2.2 – Improved consultation and "sign-off" of some investment plans by airspace users.

This option seeks to improve consultation arrangements between ANSPs and airspace users by introducing a mechanism for airspace users to "sign-off" ANSP investment plans. The option has two features: (a) a "partnership model" which establishes the framework and content of a two-way consultation process and (b) an airspace user approval of major investment plans.

Option 2.3 ­– 2.2 + giving the airspace users groups a seat in the ANSP governance

This option builds on option 2.2 by adding to it the feature of a compulsory management/supervisory board seat for each of the three major airspace users (airlines, military aviation and general/business aviation). This could be conceived either as a non-voting or voting seat.

Stakeholder views: The vast majority of the service providers do not support the idea of making the detailed service providers business plans public. Airlines on the other hand fully agree with this. The service providers, trade unions and professional associations do not believe in involving all airspace users to the governance, in particular 90% of the service providers are against it[65]. Bilaterally it has also been indicated by some stakeholders that unless a co-ordination mechanism is created between the airspace users, there is a risk that the national airlines dominate the consultation process with a disadvantage to the smaller users and non-local airlines.

4.4 Policy options 3: Ineffective role of NSAs

Option 3.1 – Do nothing.

In this option the current problems with inadequacy of resources, expertise and independence would be allowed to continue and might even worsen if the tasks of the NSAs are increased under future implementing regulations.

Option 3.2 – Introduce mutual co-operation and EU-level co-ordination and pooling of experts

This option would focus on creating closer relations between the NSAs and encouraging co-operation and exchange of best practises through common forums under EASA auspices. EASA would also organise and facilitate a pool of national experts, where NSAs could source experts for less frequent tasks, as is already being built for other areas, such as air operations and airworthiness.

Option 3.3 – Option 3.2+ institutional separation of NSAs from the ANSPs

This option is as option 3.2, but with the addition of a requirement for full institutional separation instead of current functional separation of the NSAs from the ANSPs that they oversee. The intention is to increase further the level of independence and keep NSAs from using ANSP personnel for oversight and performance target setting.

Stakeholder views: Whereas a large number of stakeholders do not believe that supporting NSAs through a new EU-level regulatory agency or a non-EU organisation would be useful, the proposal for EU action to ensure a harmonised approach between NSAs received overwhelming support from the ANSPs, airlines, manufacturing industry, militaries and even to a considerable extent from the States ministries and NSAs. The unions and representative organisations were in opposition[66]. However there is still a certain political risk as the States that still have only functional separation may oppose any new measures. Furthermore the opposition of unions and representative organisations may lead to strikes, which further strengthens the cautiousness of the States in certain States.

4.5 Policy options 4: Performance scheme governance mechanism

Option 4.1 – Do nothing

The performance scheme would continue to follow the current proposals for RP 2 and States – and through them the ANSPs– would continue to be able to diminish the ambition levels on targets. At the current rate reaching the high level SES objectives would become impossible by 2020.

Option 4.2 – Reduced Member State involvement in the target setting process

The process for setting targets would be shortened and the possibility for Member States influence would be reduced to favour technocratic input from the PRB. This would be mostly achieved by moving from the current implementing acts in comitology to delegated acts. The PRB would also be fully nominated by the Commission to ensure impartiality and allow expertise also from outside aviation to be introduced.

Option 4.3 – Allow direct nomination of the PRB by Member States, but let the PRB set targets directly without comitology

Traditionally the performance scheme has depended on the EU function of a PRB for independence and expertise and on comitology for mitigating that technocratic view with political input. This option would turn the setting upside-down by allowing the Member States to nominate the PRB members under strict criteria for independence. This criterion would for example forbid entry into ANSP service immediately after the term in the PRB in a similar manner as is determined for the board of the European Central Bank. On the other hand the comitology process would be entirely eliminated to ensure swift and undiluted target setting process.

Stakeholder views: A quarter of the respondents to the public consultation (including airlines) agree and about a third agree to some extent that the timescale of the current target-setting process is being problematic for implementation. As regards the idea of giving the PRB a more independent role, the stakeholders have a mixed opinions – a quarter of the respondents agree (including half of the ANSPs, which would be the target of the tighter scheme), while a third (mostly trade unions) believe this should not happen at all[67]. Bilateral contacts have indicated that there exists a risk of political opposition regarding reduced Member State involvement in the target setting process if States see this option more as a landgrab than a genuine attempt to improve the performance system.

4.6 Policy options 5: Refocusing of FABs

Option 5.1 – Do nothing

The do nothing option would continue the current slow progress in creation of FABs and continue to treat FABs as static structures. Whilst RP2 will include targets at FAB level, they will still de facto be implemented with a split along the national lines.

Option 5.2 – Create more prescriptive and enforceable targets/criteria for FABs

The current list of FAB criteria in Article 9a of Regulation 550/2004 is problematic in two senses. Firstly, the criteria and timeframes for FABs are too generic and do not enable flexible alliances and secondly, there is no approval required from the Commission so that there is no quality check on a FAB before establishment. The current criteria do not drive specifically performance, but more the establishment process of a formal structure. This option would replace these criteria by creating more measurable and performance based permanent criteria/targets (in addition to the targets in the performance scheme) for FABs to comply with before they can be approved as fully operational.

Option 5.3 – Creation of a more flexible and performance driven FAB-model

This option would focus the FABs on being tools for achievement of the performance scheme targets. Airspace design would be increasingly moved to the level of the Network Manager (i.e. level above FABs), whereas the FABs themselves would focus on finding the optimal alliances for each part of the services being provided. In a sense this could mean "variable geometry FABs" as long as the performance targets are attained.

Option 5.4 – Top-down approach with a new entity created from the Network Manager to design service provision

Traditionally SES has relied on the industry (ANSPs in this case) providing the right decisions and combinations to improve performance as long as certain environmental constraints were covered by the SES rules. In this model we would go the opposite way by creating a central planning entity from the Network Manager, PRB and EASA and asking it to redesign EU airspace based on 4-6 major concession blocks. A tendering process would then be held amongst the ANSPs to choose companies to run the services during a 10-15 year period.

Stakeholder views: Around third of the respondents (the service providers, the ministries and the NSAs) agreed to some extent, that there is a need for introducing a clearer and simpler performance oriented criteria for FABs, together with a simpler and more efficient enforcement mechanism, while the firmest opponents are most of the trade unions and 40% of the professional associations respondents. As regards the introduction of different forms of FAB industry led cooperation, like flexible alliances and cross-border mergers, the service providers and most of the airlines fully agree, while the trade unions and professional associations are opposed. About third of the respondents do not have opinion on this[68].

4.7 Policy options 6: The role of the network manager

Option 6.1 – Do nothing

The do nothing would continue to develop the Network Manager based on current legal scope and functions. It would continue to focus on the initial subset of possible functions and any new SESAR based functions would need to be covered by other means, such as through initiatives taken by existing individual ANSPs. Governance would remain dominated by a States and comitology process.

Option 6.2 – Move operational governance to industry and simplify EU and State governance of strategic matters

The Network Managers scope would stay the same as today, but a two-level governance system would be created: (a) all operational matters would be decided in an operations board manned by industry and (b) strategic matters (approval of the Network Strategy Plan, the Performance Plan and budget) would remain in the Network Management Board, though with a strengthened industry role. Member States would still retain a veto right for matters relevant to national sovereignty

Option 6.3 – Create a joint undertaking of the industry to operate the Network Manager

In this option the Network Manager would no longer be run as an intergovernmental organisation, because of the mismatch between such a structure and a tasking as a service provision organisation. Instead it would involve the Network Manager becoming an Industry Joint Undertaking, with participation by the industry in its widest sense, including airspace users and operators, and with appropriate distance to the supplier industry to avoid conflicts of interest. The Network Manager JU could be operated under the same concept as the SESAR JU.

Option 6.4 – As option 6.2 or 6.3, but with a role for Eurocontrol built around the Network Manager and a more comprehensive centralised service provider and including also airspace design in broad sense

This option also requires a governance reform to improve industry's role as described i