COMMISSION STAFF WORKING DOCUMENT DRAFT IMPACT ASSESSESMENT Accompanying the document Legislative proposals to update the regulations on Single European Sky - SES2+
Date: 2013-06-11
Institutions: European Commission
Subjects: Eurocontrol, European Aviation Safety Agency, air safety, air space, air traffic, air traffic control, single market, sustainable mobility














EUR-Lex - 52013SC0206 - EN











|



52013SC0206

COMMISSION STAFF WORKING DOCUMENT DRAFT IMPACT ASSESSESMENT Accompanying the document Legislative proposals to update the regulations on Single European Sky - SES2+ /* SWD/2013/0206 final */









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 in
either option 6.2 or 6.3 since the organisation would be ever more clearly a network-level
service provider and the link to the ANSPs and airspace users it serves should
be correspondingly strong. A key feature of this option is the concept of
centralised services in which certain upcoming data driven ATM services would
be rationalised through the provision of these services at network level,
including operational tendering to industry. In discussion with Eurocontrol, up
to ten centralised services have been considered to be established by the Network
Manager in the period 2013-2017. The idea is to avoid multiplication and lower in
particular the cost of SESAR deployment, which introduces numerous new
technologies and requires rationalised deployment. In the past the ATM system
has become fragmented and overlapping as each ANSP implemented system changes
separately, but SESAR allows for rebuilding from a clean – rationalised- sheet.
So far 8 candidate services have been identified, with 2 more being studied: Airport
slot/flight plan correlation; 4D trajectory planning; Military airspace
reservation booking; Digital flight briefing (expanded EAD); Centralised
surveillance tracker service; Management of scarce resources; RVSM height
monitoring stations; and an Integrated ground communications service (PENS).
Most airspace
users and even ANSPs would agree to giving the airspace users a more important
role in strategic matters, whilst the States were more reserved and other
stakeholder groups for most part had no opinion. As concerns the inclusion of
the new functions under the Network Manager, most airspace users and ANSPs
supported at least some extension, whereas quite interestingly most of the
States and other stakeholder groups had no opinion on the matter. This seems to
reflect the fact that Network Manager operations are increasingly considered to
be a service provision or at least a "support to service provision"
function and only the stakeholder directly interacting with it have views about
its role[69]. 

5          
Assessment of impacts
5.1        
Introduction and general
methodological approach 

This chapter details
the impact assessment of different options[70]. Given the strong focus
on cost-efficiency, the main impacts of this initiative are economic and
social, whilst the environmental and noise related health impacts are mostly
indirect and driven by gains in flight path efficiencies. The impacts are
quantified wherever possible, but it has to be noted that a number of options
concern aspects such as administrative or governance efficiency, where all
elements of changes cannot be quantified. In addition the precise impact of
e.g. improved performance target setting depends on a variety of external
factors – in particular the negotiating and bargaining skills of various
participants – so impacts are presented as ranges of estimates instead of
definite and precise numbers.
The impact
assessment will, at the first stage, assess and compare the options in each
policy domain with the aim to establish the (1 or 2) best performing options.
At the second stage the retained options are put together into policy
scenarios, which will be assessed and compared against each other and the full
baseline scenario.
At the first
stage the assessment focuses mostly on direct impacts, such as administration
costs, (ANS) cost efficiency, flight efficiency and capacity[71]. Also the
impacts of each option on employment, working conditions and safety are
considered. Environmental impacts are, if relevant, also assessed. At the
second stage, the analysis of the policy scenarios will (a) eliminate overlaps
(b) take account of synergies and (c) consider also indirect impacts,
including macroeconomic impacts of each policy scenario and expected
environmental benefits. 
The full
assessment (including additional examples and evidence and background calculations)
of the various options is shown in Annex V, with a synopsis below in
this chapter.
The
assessment is based on:
·       
Interviews
with key stakeholders
·       
The
electronic  survey among stakeholders carried out by the Commission
·       
Literature
review
·       
PRB
monitoring results, studies and discussions with PRB on specific issues.
·       
A
dedicated consultant's study on SES II+
·       
E3ME
macro-economic model run.

5.2        
Support services[72]
5.2.1                
Assessment of impacts

Based on the
analysis below and in Annex V, the pros, cons and associated risks of the
options can be summarised as follows:
Figure 5-1: Pros, cons and risks of options on
support services
   || Option 1.1 Do nothing || Option 1.2 Functional separation of support services || Option 1.3 Structural separation of support services 
 Pros || ·   Politically acceptable to States. ·   Avoids dislocation associated with unbundling. ·   No additional admin costs.   || ·   Relatively simple and politically acceptable ·   Provides transparency on the cost of support services. ·   Avoids dislocation associated with unbundling. || ·   Enables a true market situation to be created, with the associated efficiencies. ·   Eases the arrival of new entrants ·   Promotes technical development and innovation ·   Would ease search for synergies at the level of FABs. 
 Cons || ·   Perpetuate the current efficiency problems. ·   Resistance to technological changes. ·   Barrier for developing FABs || ·   Requires additional dimension in financial reporting and performance monitoring systems. ·   Requires shift towards market principles in management and organisational culture. || ·   One-off effort and cost of the creation of new entities. ·   Requires mechanisms to ensure continuity and quality of outsourced services ·   Requires adoption to market principles in management and organisational culture ·   Requires additional effort and know-how on contracting ·   Possible complexity in sharing infrastructure 
 Risks ||   || ·   May lead to current situation being perpetuated with just additional cost ·   Moderate risk of strikes and disruptions to traffic. || ·   Major political opposition in certain States ·   Trade unions strongly opposed ·   Considerable risk of strikes and disruptions to traffic 

5.2.1.1       Economic impacts

Cost
efficiency: Options 1.1 do nothing and 1.2 functional
separation of support services are not likely to bring major benefits. In
fact option 1.1 would act also as an inhibitor to FAB development as it would
fully retain the big static ANSP's and be least likely to lead to flexible
service provision or search of synergies. Functional separation would bring
greater clarity over expenditure and help identify opportunities to improve service.
However, this effect is uncertain and would to some extent be negated by the
need to add complexity to financial management and reduce multi-tasking of
personnel. On the other hand, based on experience from other infrastructure
industries and from the known cases of ATM unbundling (see Box 5-1), option 1.3
organisational separation of support services could, according to even a
conservative estimate, brings cost savings of 20% on the support services
provision[73]. This estimate
is considered conservative, because the estimate from the LVF company was that
they have saved up to 50% in costs, but it is evident that such savings cannot
be realised overnight due to the cost of organisational change and also that
the savings themselves will depend on the current efficiency of each provider.
Hence only 20% is assumed as benefit and even that would amount to some € 450 million
in cost savings per annum[74], comparable to 5.4% of
the total € 8.3 billion
annual ANS costs in 2011. It is actually possible that higher benefits will be
reached over time once the market has matured, but be on the safe side, for now
only 20% benefit is assumed.
Box
5‑1: Examples of efficiency gains
achieved via market based support services
ANSP sector
·               
The
Swedish ANSP; LFV, outsources systems maintenance of communication navigation
and surveillance   equipment to ELTEL Ltd since 36 years. According to PRU cost
efficiency benchmarking data (ACE 2010), LFV’s technical support staff is
approximately 9% of total staff, compared to ~22% for Europe on average. Cost
efficiency has improved, while the quality of service is high. Based on the LFV
study “Maintenance Cost Effectiveness”, outsourcing was estimated be about 50%
more cost efficient than arranging this service in-house.
·               
HIAL
manages 11 airports in the north of Scotland. It outsources its aerodrome
engineering, requiring a small number of engineers supporting 24/7 operations.
The engineers are contracted through the UK NATS. Overall HIAL’s experience of
outsourced services is positive, but it emphasised the importance of
well-defined service contracts and the need to manage risks. Their experience
is that they have been able to achieve lower costs and meet defined levels of
service. The spread between the lowest and highest offers has been ~25%.
Experience
form rail sector:
·               
Introduction
of competitive tendering has resulted in savings of 20% to 30% for Public
Service Contracts in Germany, Sweden and Netherlands[75].
Flight
Efficiency: This policy area is focused on cost efficiency and will
not affect flight efficiency.
Capacity: No impact is
likely in any of the options, assuming that proposed changes in governance
mechanisms would not affect the quality of support services.
Assurance for the latter is provided by the fact that legal requirements and
oversight arrangements would remain unchanged.
Administration
costs: Option
1.2 functional separation would bring to ANSPs additional costs
as the creation of separate business units would result in some adjustments in
the information systems and additional overhead staff costs (new administrative
layer). However, this cost would not be significant. In option 1.3 organisational
separation there will be one-off settlement costs, as the support services
would need to be structurally separated into different entities. In addition, a
requirement to subject all support services to public procurement rules would
require the ANSPs to define specifications for services, the conditions for
their provision, and the rules for non-compliance or non-performance, etc. and
hire competent staff for that purpose. It is expected that on average, each of
the 27 main ANSPs would have to hire at least 1 additional procurement expert.[76]. Therefore,
as a result of this option, the administration costs in ANSPs are expected to
increase by about € 4.5 million
per year.
NSAs could face additional
costs as regards certification of new service providers, that especially in
case of option 1.3 operational separation.  Over the time however, it is
likely that (cross-border) consolidation of support services will reduce the
number of providers and consequently also oversight costs. 

5.2.1.2       Social impacts

Impacts on
employment and working conditions: Certain impact on employment and working
conditions is already embedded into the baseline option. SESAR deployment
implies that in ANS provision is moving from traditional ground infrastructure
to satellite based systems, automated weather observation and modernised
information management resulting in reduction in staff needs. On top of that
baseline the employment related impacts of option 1.2 functional
separation will be minimal as staff will remain in the same organisation
and perform the same tasks as before. There may be marginal additional
employment in ANSPs given that a new layer of management needs to be created.
In option 1.3 organisational separation the situation is different as
new service providers will be created and staff will mostly move into these
entities. In addition, competition will exert a pressure on staff numbers and
working conditions in the search of efficiencies. Separation is also expected
to accelerate innovation and technological change as compared to the
baseline. Therefore it is expected that during the creation phase of these new providers
of support services some redundancies will be seen. Based on the evidence gathered
from privatised service providers, it may be assumed that overall employment
would decrease by roughly 10% over a decade[77], whilst the
trend in the ANSP's over the last decade (i.e. baseline) has been 5%. Hence the
additional decrease would be about 0.5% per year, but with considerable
variation depending on the service and with an emphasis on the first years of
operation.
Safety: No impact is
foreseen as the requirements on safety management systems and the oversight
arrangements will remain the same in all options. Providers of outsourced
services have to be certified by NSAs. Furthermore it is important to define
precise service conditions to ensure high quality and continuity of services.  

5.2.1.3       Environmental impacts

Given that
policy measures under this category of options have no effects on flight
efficiency, there will be no direct environmental impacts.

5.2.2                
Comparison of options

The table
below summarises the assessment of impacts and provides the comparison of each
option to the baseline in terms of effectiveness and efficiency.
Coherence will be assessed at the level of different policy scenarios in chapter
6.
Any comparison table in this report compares the
relative impacts within a row, but not the relative importance of different
rows. 
Key to the scores applied:
 ---   - || decreasingly negative 
 0 || neutral 
 + … +++ || increasingly positive 
   ||   
 
Figure 5-2: Comparison
of options on support services
   || Option 1.1 Do nothing || Option 1.2 Functional separation of support services || Option 1.3 Structural separation of support services 
 SUMMARY OF IMPACTS 
 Economic impacts: ||   ||   ||   
 Cost efficiency || 0 || + || ++ ~€ 450 M p.a. 
 Flight efficiency || 0 || 0 || 0 
 Capacity/Delays || 0 || 0 || 0 
 Administration costs || 0 || - || -- One-off restructuring costs plus ~€ - 4.5 M p.a. 
 Social impacts: ||   ||   ||   
 Employment and working conditions : ||   ||   ||   
 NSAs || 0 || 0 || 0 
 ANSPs || 0 || 0 || -- ~ - 300 jobs p.a. 
 Safety || 0 || 0 || 0 
 Environmental impacts: || 0 || 0 || 0 
 EFFECTIVENESS/EFFICIENCY 
 Effectiveness: ||   ||   ||   
 Specific objectives: 
 SO1: Improve performance of ATS in terms of efficiency || 0 || + || ++ 
 SO2: Improve utilisation of ATM capacity || 0 || 0 || 0 
 Operational objectives: 
 OO1: Ensure that the provision of Air Navigation Services is transparent, based on market principles and customer value. || 0 || + || ++ 
 Efficiency ||   ||   ||   
   || 0 || 0 || ++ (benefits € 450 M p.a. costs € 4.5 M p.a.) 
Option 1.2
brings some very limited benefits, mainly in terms of transparency of costs
related to support services, but these could be overshadowed by the increase in
cost and complexity at the administrative side. There is no guarantee that
improved transparency would effectively result in increased autonomy and
performance improvement. Option 1.3 is more likely to encourage competition
(and possibly also consolidation) of ANS and thereby drive down the service costs
for air operators. However efficiency gains could result in more demanding
working conditions and perhaps reduced employment in the ANSPs.
Overall, the decrease in employment could be compensated by the growth in general
economy, as discussed in chapter 6. Hence option 1.3 is the most performance
optimised option, whilst option 1.2 has a potential to bring some incremental
improvements in performance with lesser risk of redundancies and distress among
the employees of ANSPs.

5.3        
Focusing ANSPs on customer needs
5.3.1                
Assessment of impacts

The pros,
cons and associated risks of the options on focusing ANSPs on customer needs have
been assessed to be as follows:
Figure 5-3: Pros, cons and risks of options on
focusing ANSPs on customer needs
   || Option 2.1 Do nothing || Option 2.2 Improved consultation and sign-off of investment plans || Option 2.3 Option 2.2+airspace users having seat in the ANSP governance 
 Pros || ·   No additional bureaucracy ·   Possibility to push effectiveness of consultation by using soft measures   || ·   Clarifies consultation process ·   Provides better alignment of ANSP plans with users' needs ·   More responsive to down-turns in traffic ·   Pushed innovation, services of little value discontinued || Same as for option 2.2 plus: ·   Physical presence enables to develop shared objectives ·   Further transparency by full access to documents. 
 Cons || ·   No additional involvement of airspace users ·   Consultation continues to be a "one-way street" || ·   Time and resource consuming for both ANSPs and airspace users ·   Individual and/or short-term  focus could prevail network-level strategic views ·   Need for a mechanism allowing to maintain balance between performance and safety needs || Same as for option 2.2 plus: ·   Limited number of seats creates issues with providing  balanced representation of different user groups ·   Airspace users may lack resources and skills necessary for participation ·   Even higher risk of "short-terminism" than in Option 2.3 
 Risks ||   || ·   Effectiveness of a partnership approach is dependent on attitude. ·   Risk that the larger national airlines dominate the process ·   Need to share confidential business info may create issues || Same as for option 2.2 plus: ·   Moderate support from states ·   String opposition from ANSPs and trade unions   

5.3.1.1       Economic impacts

Cost
efficiency: Both option 2.2 improved consultation and sign-off
as well as option 2.3 governance board would have positive impacts.
Together with the approval of major investment plans, consultation (like
provided by option 2.2) is expected to have a moderate impact on
cost-efficiency, but the exact size of the impacts depends greatly on local
variables and the economic cycle – e.g. costs being
prioritised during economic downturns, whereas capacity concerns prevail in
boom times. In case of option 2.3 the direct involvement of user
representatives in decision making at the ANSP board would further strengthen
the influence of airspace users. In both cases the impact may to some
extent be balanced by the fact that all three airspace users groups (airlines,
military, general aviation) could have their different priorities. 
Flight
Efficiency: Both non-baseline options would have a positive effect on
flight efficiency as airspace users influence ANSPs to further improve routes
and implement new technologies. As with cost efficiency, the impact is greater
for option 2.3. 
Capacity: The impact
would be similar to the one on cost efficiency and flight efficiency. As
explained above, capacity issues may get more impetus during the times of
growth. This would raise an issue for both non-baseline options in the sense
that ANSPs are infrastructure industries and need to plan infrastructure with a
20-30 year horizon, whereas the airlines tend to react to short and medium-term
changes in the economic cycle. Hence additional airspace user involvement in
the ANSP governance, as foreseen under option 2.3, could compromise strategic
investment (including SESAR) during economic hardships.
Administration
costs: Both
options 2.2 improved consultation and sign-off as well as 2.3 governance
board would require some additional administrative effort from both the
ANSPs and the airspace users. Based on experience from the airport charges
consultation process, ANSPs would need to devote roughly
1.5 FTE in additional resources for preparing consultation documents and
meetings. Airspace users would need to devote roughly 1 FTE to the work in
assessing the proposals. This in total would imply an overall increase in
administration costs of € 15 million[78]. In option
2.3 governance board there would be a small additional effort for the
participation in board meetings and decisions. Since the arrangements would in
all cases be between the ANSPs and the airspace users, there will be no
administration costs for States (NSAs) or EU. 
Box
5‑2: Examples
of existing airspace users' involvement practices
·               
As
an interim measure until SES has had a chance to improve the situation, IATA
has encouraged ANSPs and the users to establish partnership agreements –
referred to as Performance Partnership Agreements (PPAs) - which establish a
framework for the consultation process and its content. 
·               
In
the UK context the discussions ahead of setting the Control Period 3 formula,
NATS (NERL) and its users have undertaken a process of discussions, whereby
they are seeking to agree between each other the key assumptions that will
underpin the decision for the NATS price control. This followed a similar
framework to the “Constructive Engagement process” between the airport operator
BAA and its users, which is modelled on the approach taken at airports in
Australia.
·               
Most
advanced example exists in New Zealand, where in addition to continuous
consultation additional motivation is created with profit sharing arrangements
between ANSP and airlines. Major investment plans are approved by users who
have to ultimately pay for them and the users face also binding commitments to
use the investments – i.e. equip aircraft with new technology or fly new
routes.  
·               
The
Canadian ANSP, NavCanada is a special purpose non-profit entity managed by a
stakeholder board. There is a general argument that although NavCanada is a
monopoly, it requires little performance oversight as stakeholders are already
represented at the Board level and monitor performance. User charges have not
gone up for 8 years, making charges around 25% lower in real terms.  Costs have
been reduced by efficiency measures and staff reductions

5.3.1.2       Social impacts

Impacts on
employment and working conditions: Impacts of option
2.2 improved consultation and sign-off would depend on the amount and
type of efficiency measures, or introduction of new technologies and procedures
that would be pushed through by the users. As implementation of new concepts would
become easier, employment might reduce slightly due to e.g. increased
automation. This would affect most the administrative support staff. Furthermore,
the introduction of new technologies could change the content of work and
require re-fitting of skills. In option 2.3 governance board this effect
could be marginally more pronounced as the influence of airspace users would be
stronger. However the exact magnitude of these changes will
depend very much on the ANSP in question as well as external variables, such as
overall economic development.
Safety: No safety
impact is expected in any of these options as the airspace users and ANSPs have
the same safety objectives. The airspace users would be keen to retain high
safety levels even where the cost-drive puts pressure on the ANSP to deliver
services cheaper. 

5.3.1.3       Environmental impacts

Any
improvement in flight efficiency or reduction of "engine-on" delays
will proportionally reduce emissions. 

5.3.2                
Comparison of options

Economic,
social and environmental impacts of
this group of options, along with their efficiency/effectiveness are scored in
the next table.
Figure 5-4: Comparison of options on focusing
ANSPs on customer needs
   || Option 2.1 Do nothing || Option 2.2 Improved consultation and sign-off of investment plans || Option 2.3 Option 2.2+airspace users having seat in the ANSP governance 
 SUMMARY OF IMPACTS 
 Economic impacts: ||   ||   ||   
 Cost efficiency || 0 || + || +(+) long term possibly - 
 Flight efficiency || 0 || + || +(+) long term possibly - 
 Capacity/Delays || 0 || + || +(+) long term possibly - 
 Administration costs || 0 || - ~- € 15 M p.a. || - >~- € 15 M p.a. 
 Social impacts: ||   ||   ||   
 Employment and working conditions : ||   ||   ||   
 NSAs || 0 || 0 || 0 
 ANSPs || 0 || - || - (-) 
 Safety || 0 || + || + 
 Environmental impacts: || 0 || + || + (+) long term possibly - 
 Effectiveness: ||   ||   ||   
 Specific objectives: 
 SO1: Improve performance of ATS in terms of efficiency || 0 || + || + (+) long term possibly - 
 SO2: Improve utilisation of ATM capacity || 0 || + || +(+) long term possibly - 
 Operational objectives: 
 OO1: Ensure that the provision of Air Navigation Services is transparent, based on market principles and customer value. || 0 || + || +(+) 
 Efficiency ||   ||   ||   
   || 0 || +* || +(+) Long term possibly - 
 *        For this option benefits are not quantified as they depend on too many factors, but it could be said that due to the cost and magnitude of aircraft operations, already the optimisation of approach and departure procedures at a single medium-sized airport (e.g. 150000 operations p.a.), would be sufficient to cover additional administration costs. Typically one "continuous descent approach" saves ~300kg of fuel and a suboptimal departure sequence may burn an additional 500-800kg of fuel per flight so the potential benefits are considerable. 
Both options
2.2 improved consultation and sign-off as well as option 2.3 governance
board would have a positive impact on overall efficiency and capacity, but
some negative impacts on employment condition inside the ANSPs. Whilst the
effect in option 2.3 is bigger, the differences between options 2.2 and 2.3 are
relatively small in terms of benefits. Option 2.3 carries higher risks, as it would be
politically more difficult to implement and could result in lesser support for
implementation of long-term investments and SESAR deployment. Therefore option
2.2 seems to be balancing best the short and long term costs and benefits. 

5.4        
Ineffective role of NSAs
5.4.1                
Assessment of impacts

Based on the
analysis below and in Annex V, the pros, cons and associated risks of the options
can be summarised as follows:
Figure 5-5: Pros, cons and risks of options on
ineffective role of NSAs
   || Option 3.1 Do nothing || Option 3.2 Mutual Co-operation, EU coordination and pooling of experts || Option 3.3 Option 3.2+institutional separation of NSAs from ANSPs 
 Pros || ·   Low-cost, minimum effort for States on the short term ·   Convenient for States that only want functional separation ·   Some improvement foreseen in baseline || ·   Addresses staff shortages in an efficient way and levels expertise ·   Strengthens cross-border (FAB) oversight || Same as for option 3.2 plus: ·   Assurance of autonomous NSA operation ·   Commonly agreed basis for definition of independence ·   Challenging ANSP towards better performance and safety. 
 Cons || ·   Inadequate resourcing of NSAs (manpower and skills) ·   Sub-optimal functioning of the performance scheme ·   No enforcement of cross-border and FAB level oversight. || ·   Potential legal barriers and funding arrangements that need to be addressed ·   Language issues ·   EASA remit does not address all aspects of performance scheme. || Same as for option 3.2 plus: ·   Yet another change to NSA scope while most of them are not yet on full speed ·   The best (seconded) staff may go back to ANSP[79] 
 Risks || ·   Conflict of interest in administering the performance scheme continues || ·   Possible conflict of interest in EASA providing support and performing inspections at the same time ·   Potential "forum fatigue" - already too many committees and organisations exists. || Same as for option 3.2 plus: ·   Major political opposition in some States still having only functional separation – though others have noted that they would welcome the pressure to change. 

5.4.1.1       Economic impacts

Cost
efficiency: Both option 3.2 mutual co-operation and expert pooling
as well as option 3.3, adding to 3.2 institutional separation, are
estimated to improve cost efficiency. The performance scheme hinges on the
national authorities being independent and expert enough to assess their ANSPs
performance and to set realistic, but ambitious targets. Hence the strengthened
expertise, as provided by option 3.2, is expected to have a positive effect,
although this is difficult to quantify. It would be a conservative assumption
to estimate that the gains form this option would at most be 50% of the efficiency
savings achieved by option 3.3. Even if improved availability of expertise and
skills (as foreseen by Option 3.2) would allow the authorities to better
identify problems, there should be a strong willingness and independence of
decision making in place (as foreseen by Option 3.3) to ensure effective actions
to rectify the matter. In the latter option, improved expertise will be
supported with true independence of NSA from the ANSPs. It is estimated to
increase the robustness of the performance scheme in a comparable manner to the
more ambitious performance scheme options i.e. some € 150 million per annum (see
section 5.5 below).  
Flight
Efficiency: As for cost efficiency, the positive effects get magnified
with greater NSA expertise and independence. While option 3.2 mutual
co-operation and expert pooling would have only a
limited effect rising from better resourcing, 3.3 institutional
separation
will be more beneficial due to the accompanying effect on NSA independence.
Capacity: Similar
impact as for cost efficiency
and flight efficiency.
Administration
costs: It
is not expected that any of the options would have impact on ANSPs
administration costs. Regarding the administration costs in NSAs, option
3.2 mutual co-operation and expert pooling is expected to save some € 6.5 million
as compared to the baseline[80], whereas in
option 3.3 which adds to option 3.2 institutional separation,
there will be approximately € 2 million
increase in administration  costs compared to the baseline[81] due to the
need to create independent NSAs in (a) the four States that still utilise
only functional separation
and (b) the four States that have a minor NSA that is functionally
separated[82]. Relevant
calculations can be found in chapter 4 of Annex V.
Expert pooling would need a coordination mechanism
at EU level, but for that purpose resources should be found by an
internal redistribution of functions in EASA.
 Box 5‑3: Approach to separation in Member States Separation between ANSPs and NSAs is necessary to ensure effective supervision and avoid conflicts of interest. Criteria for effective separation may be summarised to include: ·         Separate legal personality or organisational structure to ensure independent and authority to take appropriate action in cases of non-compliance; ·         Separate reporting lines in the NSA and authority (except possibly at the political level, where both may answer to the same minister – typically minister for transport). ·         Funding and staffing arrangements which do not hamper or in any way restrict the NSA in performing its duties, and ensure independence from pressure from the ANSP; ·         Leadership and budget of the NSA to be set by the State’s Parliament or similarly independent entity. ·         Separate public identity, including publicity and communications arrangements; ·         Visible empowerment from the national governing body (Parliament, Ministry); ·         Stringent requirements on individuals for independence. The institutional situation of NSAs in States is mixed. Eight of the 32 NSAs referenced in the SES implementation report[83] reported that they have at least one functionally separated NSA[84] from their service-provision counterparts, while the remaining NSAs have reported more complete separation (institutional/organisational). Institutional separation is considered being most effective, given that compliance with the separation criteria is built into the institutional structure. 

5.4.1.2       Social impacts

Impacts on
employment and working conditions: Compared to the baseline, option 3.2 mutual
co-operation and expert pooling would create a group of highly qualified
experts, whose job description would change and who would be regularly
dispatched to different NSAs to support them in specific projects. Option 3.3,
which adds institutional separation, would additionally lead to the recruitment of
approximately 80 new administrators to run the newly independent NSAs. This
would favour experienced staff from the ANSPs and give some balance to the
reductions in ANSP staff numbers arising from performance improvement measures.
Safety: There is a
well-documented link between oversight quality and safety levels, so
any increase in NSA quality and efficiency should improve safety levels. Option 3.3
compared to option 3.2 would have a positive impact advancement, given that an
independent authority is more likely to interfere in safety matters.

5.4.1.3       Environmental impacts

Any
improvement in flight efficiency may result in corresponding reduction in
emissions. On average the routes flown in 2011 were 4.6% longer
than the shortest distance because of ATM restrictions 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
reduction in NOx and particulate matter.

5.4.2                
Comparison of options

Economic,
social and environmental impacts of this group of options, along with their
efficiency/effectiveness are compared in the table below.
Figure 5-6: Comparison of options on ineffective
role of NSAs
   || Option 3.1 Do nothing || Option 3.2 Mutual Co-operation, EU coordination and pooling of experts || Option 3.3 Option 3.2+institutional separation of NSAs from ANSPs 
 SUMMARY OF IMPACTS 
 Economic impacts: ||   ||   ||   
 Cost efficiency || 0 || + Max ~€ 75 M p.a. || ++ ~€ 150 M p.a. 
 Flight efficiency || 0 || + || + 
 Capacity/Delays || 0 || + || ++ 
 Administration savings || 0 || ++ ~€ +6.5 M p.a. || + ~€+ 4.5 M p.a.[85] 
 Social impacts: ||   ||   ||   
 Employment and working conditions : ||   ||   ||   
 NSAs || 0 || 0 || + ~ +80 
 ANSPs || 0 || 0 || 0 
 Safety || 0 || + || ++ 
 Environmental impacts: || 0 || 0 || 0 
 EFFECTIVENESS/EFFICIENCY 
 Effectiveness: ||   ||   ||   
 Specific objectives: 
 SO1: Improve performance of ATS in terms of efficiency || 0 || + || ++ 
 SO2: Improve utilisation of ATM capacity || 0 || + || ++ 
 Operational objectives: 
 OO2: Strengthen the role of NSAs || 0 || + || ++ 
 Efficiency ||   ||   ||   
   || 0 || + annual savings <€ 82 M || ++ annual savings ~€ 155 M 
Benefits of
option 3.2 mutual co-operation and expert pooling are significant, while
its risks are mostly of an operational nature. Option 3.3, which adds to option
3.2 institutional separation of NSAs, is expected to double the
benefits, however it carries high political risks. Still option 3.3 seems to
emerge as the preferred option.

5.5        
Performance scheme governance
mechanism
5.5.1                
Assessment of impacts

The
pros, cons and associated risks of the options on the performance scheme
governance mechanism as assessed below and in annex V are summarised in the
table below.
Figure 5-7: Pros, cons and risks of options on
the performance scheme governance mechanism
   || Option 4.1 Do nothing || Option 4.2 Reduced Member State involvement in the target setting process || Option 4.3 Direct nomination of the PRB by Member States, PRB sets targets directly without comitology 
 Pros || ·   Least political opposition ·   Possibility to apply lessons learnt from RP1 || ·   States are further away from the target setting process. ·   Building capability of the PRB to make independent and broad expert judgements ·   Commission nominated members reduce risk of regulatory capture ·   Creates transparency of ANSPs investments allowing enhance SESAR deployment || Same as for option 4.2 plus: ·   Higher States' trust as regards PRB members and their expertise ·   Skipping comitology part would speed up process 
 Cons || ·   Conflict of interest continues to impact target setting, performance plan assessment and objectivity of analysis of past performance. ·   Slower rate in achieving performance improvements to EU network. ·   Airspace users have an increased feeling of lack of effective control of ANSPs.   || ·   May lose the influence of those Member States that make a positive contribution to the performance scheme. ·   Despite measures to improve PRB independence, PRB members recruited from ATM industry would still be connected to industry and States. ·   Potential influence remains via PRU, which performs most of the analysis for the PRB. ·   Need to swiftly raise PRU is technical skills || Same as for option 4.2 plus: ·   Probably only ATM experts would be nominated limiting the scope of the expertise in PRB. ·   The independence of the members would need to be overseen closely by the Commission ·         
 Risks || ·   FAB level targets proposed for RP2 could the unintended consequence of slowing down the performance scheme ·   The performance scheme will lose its momentum || ·   Risk of political opposition by States   || Same as for option 4.2 plus: ·   Considerable risk for the Commission losing control. If PRB appears being ineffective, the performance scheme could be paralysed for years until the legislation can be changed again. ·   Major political opposition for cancelling comitology 
The choice
between option 4.2 Reduced Member State involvement and option 4.3 direct
nomination of PRB by States and no comitology requires a detailed
analysis of the feasibility to implement these changes in the political
decision making process. Experience has shown that Member States, being
majority owners of regulated service providers, have no or only limited
interest to agree ambitious targets which ultimately would reduce their
possibility to earn dividends from service provision and could result in
industrial action. Both options aim at reducing the influence of Member States
in the setting of targets, in the acceptance of performance plans and
corrective measures, however, from a different angle. It can be assumed that
both options would result in the same benefits for airspace users, though the
governance and procedural arrangements differ. The main difference between the
two options is the level of risk and consequent uncertainty included in them.
Thus, in the following sections, the evaluation of the two options is done
simultaneously. Additional considerations and calculations supporting the
assessment of economic impacts can be found in Annex V chapter 5.

5.5.1.1       Economic impacts

Cost
efficiency: Option 4.2 reduced Member State involvement and option 4.3 direct
nomination of PRB by States and no comitology are designed to have a
considerable impact on the level of targets by reducing States ability
to water down performance measures in the decision making process. Better
consistency between the State and EU targets is likely to be achieved.  Experience
from RP1 demonstrated that currently it may be difficult to achieve a higher
level of ambition than 2% reduction in costs per year. At
the same time the PRB/PRU considers that an annual reduction of 5% is possible
in RP2, as there is considerable duplication of costs and inefficiencies built
into the current programmes. Even assuming a 1.5 percentage point rise in the
target (e.g. from 2 to 3.5%), the benefit of these options would amount to roughly
€ 1.5 billion over the whole reference period, or € 300 million per
annum in additional savings for the airspace users. Due to the mechanism of
the performance scheme, it can be assumed automatically that whatever targets
are set are also met. If the targets are not met and the costs are higher than
targeted, they can in any case not be passed on to the airspace users, but have
to be covered from other sources instead.
Flight
Efficiency: Both options 4.2 reduced Member State involvement and
4.3
direct nomination of PRB by States and no comitology should bring more
ambitious targets, both because of a change in the decision making process, and
because of the better information availability leading to more informed decisions and
systematic approach. This would allow addressing current inconsistencies
between e.g. flight efficiency and charging schemes. Indirect losses generated
by the system are currently assessed by the PRB at € 3.8 billion per annum[86], and by achieving
slightly higher targets for flight efficiency savings could be in total around € 2 billion per
year.

Capacity: Again the
potential gains for the both non-baseline options are linked to the impact of
higher target levels. As a rule of thumb, PRU experts assume that 1 minute
average annual delay costs € 1 billion.
Cost optimum models suggest that 0.35 minute delay target (compared to the
current 0.5 minute target) is achievable. This would mean that annually € 150 million
can be saved by more effective target setting mechanism.
Environmental
impact: Any
improvements in flight efficiency will deliver also environmental benefits as
they reduce the unproductive engine running time and hence fuel burn and
emissions. 
Administration
costs: None
of the options are expected to have major administration impacts on the ANSPs, except
perhaps a need for more timely data delivery. Also no impacts on NSAs or
national budgets are foreseen, given that the work of
the PRB is financed from the EU budget. Option 4.2 reduced Member
State involvement foresees creation of a new PRB directly under
the European Commission. The number of the PRB members should reduce from 13 to
7[87], which reduces
to some extent PRB costs. At the same time PRU may need some extra resources to
manage additional technical work, thus cancelling these savings out. Overall
impact of both options on the EU budget will be neutral. 

5.5.1.2       Social impacts

Impacts on
employment and working conditions: Option 4.1. do nothing would have
already certain negative impact on employment and working conditions as described
in section 5.2.1.2. On top of that, as pressure to improve efficiency
increases, both options 4.2 reduced Member State involvement and 4.3 direct
nomination of PRB by States and no comitology would be likely to lead
additional redundancies, in particular amongst those who work in the support
services as these have been determined as the ones with most potential for
efficiency improvement. It can be
expected that some of the workforce made redundant at air navigation service
providers finds employment at the manufacturing industry and other areas where
technical engineering skills are required. Furthermore, normally this type of
development affects first the older members of staff as they have highest pay
and according to national agreements are often eligible for early retirement
schemes. Similarly the working conditions (job descriptions) are most likely to
change for the support services as their modus operandi evolves.
Safety: Safety
should not be impacted by the more ambitious performance targets, given that these
form one key performance area. But there could be concerns about the cost
cutting possibly leading to trade-offs in safety, unless the oversight
authorities are up to the task of effectively enforcing the safety management
systems.
Therefore it is crucial to strengthen the NSAs as proposed by options 3.2 and
3.3. 

5.5.1.3      
Environmental impacts

Any
improvement in flight efficiency should result in corresponding reduction in
emissions and related environmental benefits. As regards noise, there are inherent
trade-offs between fuel burn and emission on the one hand, and noise on
the other hand[88]. When
seeking to improve flight efficiency on horizontal and vertical profiles, it is
unlikely that routing will consider noise impact as constrain and therefore no noise
benefits are foreseen.

5.5.2                
Comparison of options

Economic,
social and environmental impacts of
this group of options, along with their efficiency/effectiveness are compared
in the table below.
The benefits
of the performance scheme are linked to the willingness and ability of the NSAs
to support and implement the tighter targets. Therefore the actual level of
benefits in this policy domain depends on the expertise and independence of
NSAs, as discussed in section 5.4. NSA implementation deficit could be
countered by the Commission via infringements procedures, but that
counter-effect will inevitably come with a delay, whereas the costs are
immediate. Therefore, in the table below, for the all economic benefits a 20%
uncertainty factor is applied to reflect the uncertainty stemming from the
variations in the work of different NSAs.
Figure 5-8: Comparison of options on the
performance scheme governance mechanism
   || Option 4.1 Do nothing || Option 4.2 Reduced Member State involvement in the target setting process || Option 4.3 Direct nomination of the PRB by Member States, PRB sets targets directly without comitology 
 SUMMARY OF IMPACTS 
 Economic impacts[89]: ||   ||   ||   
 Cost efficiency || 0 || ++ € 240-300 M p.a. || ++ € 240-300 M p.a. 
 Flight efficiency || 0 || ++ € 1.6-2 Bn p.a. || ++ € 1.6-2 Bn p.a. 
 Capacity/Delays || 0 || + € 120-150 M p.a. || + € 120-150 M p.a. 
 Administration costs || 0 || 0 || 0 
 Social impacts: ||   ||   ||   
 Employment and working conditions : ||   ||   ||   
 NSAs || 0 || 0 || 0 
 ANSPs || 0 || - - ~ - 2800-6000 jobs || - - ~ - 2800-6000 jobs 
 Safety || 0 || 0 || 0 
 Environmental impacts: || 0 || + || + 
 EFFECTIVENESS/EFFICIENCY 
 Effectiveness: ||   ||   ||   
 Specific objectives: 
 SO1: Improve performance of ATS in terms of efficiency || 0 || ++ || ++ 
 SO2: Improve utilisation of ATM capacity || 0 || ++ || ++ 
 Operational objectives: 
 OO3: Strengthen the process of setting up targets and enforcing the performance scheme || 0 || + || ++[90] 
 Efficiency ||   ||   ||   
   || 0 || ++ € 2450 M p.a. || ++ € 2450 M p.a. 
The options
exhibit in broad terms similar outcomes, but carry major differences in
associated (political) risks. In case of option 4.2 reduced Member
State involvement the risk is linked to the likelihood of achieving
States agreement to the proposal. Option 4.3 direct nomination of PRB
by States and no comitology carries, in addition to possibly strong political
resistance, also a considerable risk as regards EU losing control of the
performance scheme. In an optimal situation it might outperform option 4.2, but
equally the system could become the hostage of the strong views of a small
number of individuals in the PRB (losing the nature of check and balances in
the system) and end up reducing the benefits considerably. Therefore option 4.2
is preferred.

5.6        
Refocusing of FABs 
5.6.1                
Assessment of impacts

The pros,
cons and associated risks of the FAB options, as assessed below and in annex V
are presented below.
Figure 5-9: Pros, cons and risks of FAB options
   || Option 5.1 Do nothing || Option 5.2 Create more prescriptive and enforceable targets/criteria for FABs || Option 5.3 Creation of a more flexible and performance driven FAB-model || Option 5.4 Top-down approach with a new entity created from the Network Manager to design service provision 
 Pros || ·   Least political opposition vis-à-vis the States and ANSPs ·   Minimal new regulation required. ·   Minimal disruption in those FABs that are further in development and avoids risk of FABs to lose what focus they currently have. || ·   Provides FABs more focus and direction. ·   Plans underpinning the FABs would be subject to scrutiny and on-going monitoring. ·   Keeps existing FABs in place and refocuses them using an evolutionary approach ·   Relatively simple to implement. ·   Addresses the alleged legal vacuum that currently exists on what FABs are meant to achieve and look like and when. || ·   Overcomes the issue of low benefit formal FABs encouraging only performance driven partnerships ·   Consistent with the philosophy that the performance scheme sets the means, ANSPs choose their means, and the EU intervenes only if targets are not met ·   Consistent with the NM role– allows the NM to encourage general trends, no micromanagement   || ·   Provides an incentive to encourage service excellence and efficiency. ·   Transfers performance risk to service providers and gives airlines certainty on pricing. ·   Much faster rationalization of service provision and consequent reduction in costs and user charges. ·   Better basis for SESAR, as fewer national approaches. ·   Seen as an opportunity by the more commercially focused ANSPs. 
 Cons || ·   FABs continue to deliver slowly, if at all. ·   Unacceptable to the airspace users, who see FABs as failures ·   FABs not effectively supporting the achievement of SES targets ·   The remaining issues that risk delivery get not addressed   || ·   Until FABs are established as operating entities performance measurement will be problematic ·   FABs would be not focused on improving performance, but on complying with the formal requirements ·   Needs to be supported with a robust and effective enforcement mechanism. ·   Duplicates the performance scheme || ·   Stronger line required on non-performance ·   FAB development would become less transparent and complex ·   FABs become more difficult to manage as interfaces for the NM, SESAR, EU and airlines.   || ·   Would require extensive preparatory work to define the optimums. ·   Success would depend on the quality of regulation. ·   Over time the system could lead to an oligopoly of ANSPs ·   Will take a long time to implement fully (10-20 years)   
 Risks || ·   If no action now, the FAB concept may slow down and become marginalised. ·   ANSPs start deploying SESAR based on the historic State level approach. || ·   Risk of political opposition. ·   May lead the Commission deep into the micro-managing of FAB developments || ·   Risk of diluting the FABs, lack of focus and losing whatever benefits have already been achieved || ·   Such a radical change could bring unknown risks, including design and concentration related issues. ·   Risk of political deadlock is very high   

5.6.1.1       Economic impacts

Cost
efficiency: Option 5.1 do nothing is expected to
bring only some slow developments as described in section 2.3. Both options 5.2
prescriptive targets and option 5.3 flexible FABs can bring
roughly € 10 million annual efficiency benefits (derived conservatively from
the initial FABs' implementation plans)[91].  However,
the approaches in these options are very different and the success of option
5.2 hinges largely on how well developed and enforced the targets are, whereas
in option 5.3 the benefit is tied to the strength of the performance
scheme. The potential benefits of the most ambitious option 5.4 top-down FABs
are considerably higher - about € 680 million per year, once the system is up and
running, however the setup would take at least 10-15 years. 
Flight
Efficiency: Options 5.2 prescriptive target, option 5.3 flexible
FABs and option 5.4 top-down FABs should bring moderate benefits
compared to the baseline. However in all cases the primary benefits as regards
design of airspace configurations, are expected to come from the Network
Manager-level co-operation[92]. 
Capacity: Mostly the
same as for cost and flight efficiency (i.e. Network manager is important in
driving the change), but in this case the most ambitious option
brings more benefits as it would speed up infrastructure planning through
centralisation.
Administration
costs: For
options
5.2 prescriptive targets and option 5.3 flexible FABs the
administration costs would be relatively insignificant. Option 5.4 top-down FABs
would require reorganisation of entire ANSPs service provision model.
Establishment of a new centralised entity would require considerable
expertise in airspace design and infrastructure management, but also know-how
on management of concessional relations. It is difficult to estimate these
additional costs, but at the minimum a staff of 50-100 would need to be
recruited, meaning an additional cost of € 0.8-1.6 million (€ 162 000
per person per year[93]). These additional
costs could be charged through the route charges, but overall would remain
lower than the cost of running 27 separate systems.

5.6.1.2       Social impacts

Impacts on
employment and working conditions: Options 5.2 prescriptive
targets and 5.3 Flexible FABs would lead to some limited
redundancies (estimated up to 400 redundancies) and changes in working
conditions over the time as FABs would seek operational synergies. Option 5.4 top
down FABs would lead to a rapid consolidation of ANS sector, eventually ending
up with 5-6 ANSPs with other ANSPs either being closed down or merged into
bigger providers. This would mean not only redundancies, but also a fundamental
shift in working conditions, variability of environments and changes in job
security.
This
option would eventually reduce the ANSP employment by at least 1400 jobs.
Safety: None of the
options will have safety impacts as long as the oversight arrangements by NSAs
are kept in good shape. This makes it increasingly important that the NSA
expertise and independence are improved (as considered above) and that EASA
continues to be effective in oversight of the NSAs. There have been no reports
of private providers having a worse safety record than traditional state owned providers
so it can be expected that the ownership model of service provision is
irrelevant compared to the robustness of the safety management system.

5.6.1.3       Environmental impacts

Environmental
impacts are linked to improvements in flight efficiency. Elaborate contractual
mechanisms need to be used to avoid profiteering at the expense of environment
and noise in option 5.4 top down FABs, but the potential benefits are equally
high as a better optimisation of routing can be triggered by noise and
environmental targets.

5.6.2                
Comparison of options

Economic,
social and environmental impacts of this group of options, along with their
efficiency/effectiveness are compared in the table below.
Figure 5-10: Comparison
of FAB options
   || Option 5.1 Do nothing || Option 5.2 Create more prescriptive and enforceable targets/criteria for FABs || Option 5.3 Creation of a more flexible and performance driven FAB-model || Option 5.4 Top-down approach with a new entity created from the Network Manager to design service provision 
 SUMMARY OF IMPACTS ||   
 Economic impacts: ||   ||   ||   ||   
 Cost efficiency || 0 || + ~€ 10 M p.a. || + ~€ 10 M p.a. || +++ ~€ 680 M p.a. 
 Flight efficiency || 0 || + || + || + 
 Capacity/Delays || 0 || + || + || + 
 Administration costs || 0 || 0 || 0 || € 0.8-1.6 M p.a. 
 Social impacts: ||   ||   ||   ||   
 Employment and working conditions : ||   ||   ||   ||   
 NSAs || 0 || 0 || 0 || 0 
 ANSP's || 0 || ~ - 400 jobs || ~ -400 || ~ -1400 jobs 
 Safety || 0 || 0 || 0 || 0 
 Environmental impacts: || 0 || + || + || + 
 EFFECTIVENESS/EFFICIENCY ||   
 Effectiveness: ||   ||   ||   ||   
 Specific objectives: ||   
 SO1: Improve performance of ATS in terms of efficiency || 0 || + || + || ++ 
 SO2: Improve utilisation of ATM capacity || 0 || + || + || + 
 Operational objectives: ||   
 OO4: Strategic redirection of FABs. || 0 || + || ++ || ++ 
 Efficiency ||   ||   ||   ||   
   || 0 || + ~€ 10 M p.a. || + ~€ 10 M p.a. || +++ >€ 680 M p.a. 
In conclusion
it can be said that option 5.4 top-down FABs has by far the highest
possible efficiency and capacity benefits, but it is also politically very
difficult to implement and contains some serious technical feasibility risks. Time
for such a revolutionary restructuring of the sector may not yet be ripe. Option
5.3 flexible FABs provides roughly the same benefits as option 5.2 prescriptive
targets, but is better aligned with the underlying principles of the
performance scheme and thus more coherent with existing SES framework. It also
carries additional potential if combined smartly with other options (see
chapter 6). Therefore it could be recommended as the preferred option, in
condition that a deadline should be set by which the new FABs will be assessed
in terms of their capability to contribute to the performance targets. If their
value added then is not apparent, development in line of the top-down option 5.4
would be invoked.

5.7        
Role of the network manager
5.7.1                
Assessment of impacts

The pros,
cons and associated risks of the network manager options, as assessed in this
part and in annex V, are presented below.
Figure 5-11: Pros, cons and risks of the options
on the role of the network manager
   || Option 6.1 Do nothing || Option 6.2 Operational governance by industry, EU and MS simplified strategic governance || Option 6.3 Joint undertaking of the industry to operate the Network Manager || Option 6.4 Options 6.2 or 6.3 with Eurocontrol being Network Manager, including airspace design 
 Pros || ·   The NM may need some time for current functions/processes/relations  to mature   || ·   Greater user influence ·   Allows the NM to effectively manage the performance of the network. ·   Enhanced cooperation || ·   Greater user influence ·   The NM maintains neutrality needed for centralised services. ·   A more strategic partnership between FABs and Network Manager may reduce duplications. ·   Dependency of the Network Manager role and SESAR is recognised supporting achievement of the European ATM Master Plan || ·   Establishes a semi-commercial model as an option for provision of ATM support services. ·   May lead to centralisation of additional services (e.g. MET) providing scale effects ·   ANSP given direct management oversight. ·   Optimal solution for harmonisation of systems and facilitating alignment with SESAR. 
 Cons || ·   The NM remains weakly integrated into the planning and investment decisions of ANSPs ·   The NM may struggle in establishing itself as a strategic partner to ANSPs and FAB ·   No basis for widening the scope of functions  || ·   The NM has no enforcing powers ·   The Network Manager relies on ANSPs/FABs to deliver network performance, but this option could make them less committed || ·   The State and ANSP stakeholders need to be prepared to work through the FAB structure. ||   
 Risks || ·   If the NM functions are not extended to support SESAR, the deployment of SESAR may be delayed || ·   User priorities (being often short-term)  may not align with SES or SESAR priorities || ·   User priorities (being often short-term)  may not align with SES or SESAR priorities || ·   Many States would oppose a commercial model if outsourcing to external companies is used. 

5.7.1.1       Economic impacts

Cost
efficiency: Impacts of the options 6.2 operational
governance to industry and 6.3 joint undertaking would be only
marginally positive. While user influence increases, the decisions on service
provision remain ultimately in hands of ANSPs. Still, under option 6.3 there
would be more scope for the Network Manager services which would slightly improve
the potential for efficiency gains. Option 6.4 centralised
services would have considerable potential for improving the baseline
situation, but the level of outcome depends on the precise content and format
of the centralised services provided by the Network Manager[94]. However,
even a conservative estimate would be a benefit of € 150-200 million over the
next decade and there is a possibility for multiplication (up to 10 times) of
this benefit with inclusion in the scope the meteorological services and some
prospective SESAR functions[95].
Flight
Efficiency: For options 6.2 operational governance to industry
and 6.3 joint undertaking the impact would be only marginally positive due to the
increased influence of airspace users. Option 6.4 centralised
services would be expected to have more profound effect by pushing
the performance achievements towards the higher end of the RP2 flight
efficiency targets.
Capacity: As for
flight efficiency, the impacts of options 6.2 operational governance to
industry and 6.3 joint undertaking would be only marginally positive. Option 6.4 centralised
services would have potential for higher delivery through improvements in
flow management via introduction of effective 4D trajectory management[96]. 
Administration
costs: Administration
costs would remain unchanged for option 6.2 operational governance to
industry as model will be very similar to the existing one. In option 6.3 joint
undertaking the costs of running the Network Manager Board would be doubled
as more frequent meetings are needed. These costs would be covered through the
route charges in the standard manner. In option 6.4 centralised services
there would be some additional administration cost in EASA overseeing the
enlarged Network Manager. This cost could be recovered in the normal manner from the
entity being overseen (i.e. in this case the Network Manager). In total these
costs would not exceed one FTE (i.e. € 162 000) for options 6.2 and 6.3 as all the
additional work is just incremental addition to already existing work. For
option 6.4 a second FTE should be accounted for.
 Box 5‑4: Business case for a centralised network services[97] The concept of more centralised services for the network manager is built on the success of initiatives such as the European AIS Database (EAD[98]) and, more recently, the PENS network service[99]. The objective of any centralised service must be to meet user's requirements in an efficient way, avoiding duplication of the service across the user base. Centralised services are also driven by an imperative to collaborate, and may show some or all of the following characteristics: ·         require information to be shared with a high degree of trust (accuracy, integrity, confidentiality and security); ·         provide services that may be complex and therefore difficult to fulfil; ·         meet common needs of users without generating a ‘superset’ of requirements; ·         provide a common view of information, typically through a single point of access; ·         provide de-facto harmonisation of information and its formats and processes; ·         support open source access to enable users or other suppliers to innovate value-added services (without duplicating costs to stakeholders). ·         Allow for deploying SESAR concepts from a blank sheet with minimal cost.   It would be reasonable to expect a compelling business case for a centralised service, which will not only account for cost-benefit analyses but also consider risks and benefits to service quality.  The ideas and initial investigations for a centralised service should arise through existing bodies, such as Eurocontrol, FABs, other ANSP Alliances and, in the future increasingly the SESAR Deployment Manager. The Network Manager is the logical coordinating point/contracting agent for a number of the services currently provided by ANSPs individually and in particular for the entirely new services arising from SESAR.  

5.7.1.2       Social impacts

Impacts on
employment and working conditions: There will be no impact
under options 6.2 operational governance to industry and 6.3 joint
undertaking. In case of option 6.4 centralised services the practise
of tendering out of the centralised services for time-bound concessions would
incur periodic changes in the companies providing these services and
subsequently job security in these companies would be lowered. However, many
of these services are new services, being created by the SESAR programme. No
reduction in overall staff numbers is expected.
Safety: No effects in
any of the options.

5.7.1.3       Environmental impacts

Linked to the
changes in flight efficiency, the impacts in options 6.2 operational
governance to industry and 6.3 joint undertaking would be only
marginally positive. Option 6.4 centralised services would be
expected reduce emissions more substantially.

5.7.2                
Comparison of options

Economic,
social and environmental impacts of this group of options, along with their
efficiency/effectiveness are compared in the table below.
Figure 5-12: Comparison of the options on the
role of the network manager
   || Option 6.1 Do nothing || Option 6.2 Operational governance by industry, EU and MS simplified strategic governance || Option 6.3 Joint undertaking of the industry to operate the Network Manager || Option 6.4 Options 6.2 or 6.3 with Eurocontrol being Network Manager, including airspace design 
 SUMMARY OF IMPACTS ||   
 Economic impacts: ||   ||   ||   ||   
 Cost efficiency || 0 || + || + || ++ ~€ 15-20 M p.a. 
 Flight efficiency || 0 || + || + || ++ 
 Capacity/Delays || 0 || + || + || ++ 
 Administration costs || 0 || - € 0.16 M p.a. || - € 0.16 M p.a. || - € 0.32 M p.a. 
 Social impacts: ||   ||   ||   ||   
 Employment and working conditions : ||   ||   ||   ||   
 NSAs || 0 || 0 || 0 || 0 
 ANSPs || 0 || - || 0 || - 
 Safety || 0 || 0 || 0 ||   
 Environmental impacts: || 0 || + || + || ++ 
 EFFECTIVENESS/EFFICIENCY ||   
 Effectiveness: ||   ||   ||   ||   
 Specific objectives: ||   
 SO1: Improve performance of ATS in terms of efficiency || 0 || 0 || 0 || ++ 
 SO2: Improve utilisation of ATM capacity || 0 || 0 || 0 || ++ 
 Operational objectives: ||   
 OO5: Strengthen the governance and operational scope of the Network Manager || 0 || + || + || ++ 
 Efficiency ||   ||   ||   ||   
   || 0 || + || + || ++ ~€ 15-20 M p.a. 
In
conclusion, option 6.4 brings the greatest efficiency and capacity benefits and
the only question is whether it should be combined with the governance model in
option 6.2 or 6.3. As noted in the cost efficiency assessment, option 6.3 has a
slight edge in the sense that being fully industry-run, the organisation would
probably seek efficiencies slightly more actively than in case of States-run
organisation which could continue defending national status quos. Moreover,
given that the Network Manager providing the centralised services would
essentially be an ANSP like any other, it would be logical to choose a
combination of options 6.4 and 6.3 as the preferred option.

6          
Assessment of policy scenarios
6.1        
Formation of policy scenarios

In chapter 5,
20 policy options in different policy domains were assessed. In this chapter the
options will be combined together to form 3 policy scenarios,
each covering all six policy domains.
Three policy
options have been discarded after the first round of assessment, as
carrying too high risks with limited or uncertain benefits:
·       
Option
2.3 –user participation in the ANSP governance board– while
this is marginally more effective than option 2.2 improved consultation and
sign-off, it carries high risk of political opposition and it could result
in lesser support for long-term investments and SESAR deployment.
·       
Option
4.3
– direct nomination of PRB by States and no comitology – has been
discarded given that it carries risk of political opposition, but could
also become hostage to the strong views of a small number of individuals in the
PRB. At the same time its effectiveness is roughly the same as for Option 4.2 reduced
Member State involvement in the target setting process.
·       
Option 5.4 – top-down
FABs
has
by far the highest possible efficiency and capacity benefits, but at the same
time it is politically very controversial and contains some serious technical
feasibility risks.
Finally Option 6.2 operational
governance to industry has been dropped as its effects compared to
the baseline would be only marginal.
Remaining
options have been grouped to three policy scenarios as outlined in Figure 6-1.
Figure 6-1: Formation of policy scenarios
 Policy domain || Policy scenario 1: Baseline || Policy scenario 2: Risk optimised || Policy scenario 3: Performance optimised 
 1.    Support services || 1.1 Do nothing || Option 1.2: Functional separation of support services || Option 1.3: Structural separation of support services 
 2.    Focusing ANSPs on customer needs || 2.1 Do nothing || Option 2.2: Improved consultation and sign-off || Option 2.2: Improved consultation and sign-off 
 3.    Ineffective role of NSAs || 3.1 Do nothing || Option 3.2: Mutual co-operation and expert pooling || Option 3.3: 3.2+ Institutional separation of NSAs from ANSPs 
 4.    Performance scheme governance mechanism || 4.1  Do nothing || Option 4.2: Reduced Member State involvement || Option 4.2: Reduced Member State involvement 
 5.    Refocusing of FABs || 5.1 Do nothing || Option 5.2: Prescriptive FAB targets || Option 5.3: Flexible FABs provides 
 6.    The role of the network manager || 6.1 Do nothing || Option 6.3: Industry Joint Undertaking || Options 6.4+6.3: Industry Joint Undertaking + Eurocontrol as enlarged Network Manager 
Scenario 2
seeks to secure a moderate improvement, with less resistance from the
authorities and the ANSP sector, thus causing minimal political risks. It has a
chance of getting a wider political support and of creating less concern in the
ANSP sector, given that the most politically contentious options, such as
structural separation of support services (option 1.3) and institutional
separation of NSAs from the ANSPs (option 3.3) have been left out. It can be
expected that many States would tend to be protective towards their ANSP's and
therefore they would prefer scenario 2 to scenario 3. However, this excludes
possibility to apply option 5.3 (creation of a more flexible FABs) as the
latter would be meaningful only if ANSP services were unbundled. As a
consequence, FABs can in this scenario only be enforced using prescriptive
targets, which would duplicate the performance scheme and could result in
situation where the co-operation in FABs becomes disconnected from market needs.
Airlines and most of the other civilian airspace users appear to be unitied in
support of Scenario 3, due to the greatest promise of performance improvements
and especially cost cuts, whilst for the same reason the unions and
representative organisations have differing approaches. Service providers
themselves appear somewhat divided, but there is an increasing element of them
looking for new business opportunities, which would arise from the Scenario 3
proposals for support services, FABs and the Network Manager.
Scenario 3
accepts a higher risk of opposition, but has the potential to improve
performance considerably by more ambitious policy options but also through
synergies between the options in different policy domains. For example:
·       
More
flexible FABs with the possibility of multi-directional co-operation (option
5.2) can only work optimally if the big question of airspace organisation is
moved to the network level (i.e. the Network Manager option 6.4). This would
leave the ANSPs more flexibility as how to organise FAB co-operation in the
other parts of their operation.
·       
Enforcement
of the Network Manager (6.4) supports achievement of performance targets. In
particular, airspace configuration is a matter, where the benefits of
centralisation are particularly strong as routes can be drawn optimally for
flights spanning more than one FAB.
·       
Institutionally
separated NSAs (option 3.3) strengthen the option 4.2 reduced Member State
involvement in the target setting considerably by allowing the NSAs to
devise national targets without conflicts of interest. It also puts all ANSPs
on a level playing field vis-à-vis their oversight authorities in a situation
where option 1.3 unbundles the support services into separate organisations.
·       
Option
1.3 on structural separation of support services creates multiple
service units and thus enabling flexible service provision in FABs. In these
conditions support services can be shared and tendered by several core ANSPs
together. It also facilitates centralisation of certain services under the
Network Manager.
·       
Option
3.2 on NSA co-operation and expert pooling promotes cross-border approach and
thus support FAB development. At the same option 3.3, which adds to this an
organisational separation of NSAs, can better ensure that performance
improvement would not lead to trade-offs in terms of safety. Independent NSAs
would also increase the probability of more ambitious targets.
·       
Option
2.2 improved consultation and sign-off of investment plans helps to push
the ambition level of performance targets addressed by option 4.2.
Importantly,
the performance optimised scenario 3 is clearer in creating an environment
where the roles of the different actors are well defined. This scenario focuses
on the actual customers of the system – the airspace users and is therefore
supported by airlines and other airspace users, who have been very vocal about
the need for change. However the reforms required in ANSP sector are more
radical and would be met with significant opposition. 
Hence the
third scenario seeks to maximise performance gains, whilst still being politically
acceptable. Scenario 3 is also strongest in supporting the general
recommendation of the 2011 Commission communication, which recommended that
"In particular, the Union needs to establish an integrated European air
traffic management system, a true network with a single governance structure
and a stronger regulatory and oversight capability". The SES2+
initiative and in particular Scenario 3 should support this goal;
o       an integrated
European air traffic management system is supported, by
introducing harmonised operating rules under the EASA framework, by reinforcing
the Network Manager to operate network-level services and by FABs to run local
service provision in a more integrated manner. 
o       the
replacement of 27 national regulatory environments by a single governance
structure is ensured by a single system, where EASA drafts common technical
rules, the Commission focuses on economic regulation and enforcement of
harmonised EU rules and Eurocontrol on operating the Network Manager, whilst
Member States implement nationally the rules agreed jointly in the Single Sky
Committee.
o       a stronger
regulatory and oversight capability is ensured by
the abovementioned structure, where NSA's are finally made independent of the
entities they oversee and EASA not only drafts rules as a body bringing
together best EU expertise in ATM, but also supports the NSAs by organising
common forums to exchange best practises and pool experts so that the
deficiencies n NSAs resources can be overcome. 

6.2        
Assessment of
impacts of the policy scenarios

To compare
the economic effect of the various scenarios the assessment of the individual
options in chapter 5 has been brought together in figure 6-2 comparing the
impacts and effectiveness/efficiency/coherence of the three policy scenarios. 

6.2.1                
Economic impacts

Accounting
for synergies
In assessing
the economic impacts of the options on the performance scheme governance
mechanism (options in policy domain 4), an uncertainty element was factored in
to reflect the ambiguity stemming from different effectiveness levels of NSAs
(c.f. section 5.5.2). In the context of scenarios, proper functioning of NSAs
is critical to the maximum effects of many other options. Therefore for
scenario 2 – which does not require full NSA independence – the lower end of the
benefit ranges have been used, while for scenario 3 - with the full separation
of NSAs - high end of the range is applied.
Accounting
for overlaps
Assessment
has shown that the overlaps in terms of benefits are not major, and relate to
key role of NSAs being the guarantors of the system. The role of NSAs is
central in setting and enforcing the national targets within the performance
scheme and their effect is already factored into the analysis as described
above. Therefore the benefits arising from option group 3 (Ineffective role of
NSAs) alone[100] have been
cancelled out in the scenario analysis.
It should
also be noted that the benefits would in reality not occur in a linear line,
although they are mostly expressed per annum. For example the expected annual
benefit of € 450 million
from unbundling (Option 1.3) would take some time to realise
as a truly competitive market requires several years to develop to its full
potential. Therefore the performance optimised scenario would probably
initially deliver results similar to the risk optimised scenario and improve
over the time to produce additional benefits. 
In addition,
a high level assessment of the macro-economic impact has been carried out by
the consultant using the E3ME macro-economic model, with efficiency benefits
for aviation sector used as inputs[101].

6.2.2                
Social impacts

As regards employment in
the ANSP's, a reduction in costs will lead to fewer employed staff in the ATM
industry. These developments were already factored in while SES was agreed to
in 2004 and in 2009, as the performance improvements and technological
modernisation agreed at the time require a reform of the way the ATM system
operates and a reduction in the resources used to run the system. Based on the
PRB indicative ranges of cost reduction, the IA support  study estimated[102] that the
different scenarios could lead to the following reductions in staff over
the period 2015-2019, based on 46 300 staff in 2014[103]:
·       
"Do
nothing" scenario, up to 500 reductions in staff;
·       
"Risk
optimised" scenario, up to 3400 reductions[104] in staff;
·       
"Performance
optimised" scenario, up to 9400 reductions in staff;
The
overwhelming majority of these reductions is expected to occur in support
services and administration. The job losses in ANSPs would be mitigated by the
growth of the employment in NSAs. In addition, the Network Manager
with an extended scope would need to outsource services from different
providers, creating new employment and business opportunities. To some extent
also engineering personnel would be affected, although the future
technological modernisation challenges are likely to overshadow the impact for
them. On the other hand the situation for core air traffic control personnel
seems very likely to remain stable or even grow as dictated by traffic growth[105]. There will
be also slight increase in the employment in NSAs. 
In summary,
policy scenario 2 has a lower immediate negative social impact than scenario 3
as far as ANSPs and Member States authorities are concerned. However it puts a
burden on the airspace users by creating a less favourable operating
environment with the corresponding loss of additional growth and jobs. On a
societal scale scenario 3 has more long-term potential by helping create a
competitive and sustainable aviation system that serves the EU economy and
supports employment, even if during the restructuring phase it
causes employment shifts and social costs, in particular for the ANSPs and some
NSAs[106]. Considering
the long-term social effects of a healthy economy in the air transport sector,
scenario 3 is considered most favourable despite the short term costs. However
it also necessitates a thorough implementation of the existing social dialogue
processes to mitigate the negative impacts and as far as possible to plan
changes so that they can be achieved through natural development of retirements
and mobility. Considering the relatively long timescale of change, it is
unlikely to lead to rapid pay-offs, but rather be manageable through a natural
process, if due care is taken.
At the level
of the general economy, the more favourable business conditions for airlines
should induce new working places in general economy, which should increase
employment up to 13 000. The new jobs are expected to be primarily created
in the airline and airport sectors, as they will see higher levels of activity
through lower costs and higher capacity, but also the usual secondary impacts
in related fields will be taking place. In the case of aviation this secondary
impact tends to be considerable at times such as now, when the air traffic
system has capacity bottlenecks and thus acts as a hindrance to overall
economic growth.

6.2.3                
Environmental and noise impacts

Environmental
costs in ATM are a function of flight efficiency, which attempts to minimise
the current average 42km/flight route extension. 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. This
translates to 92 000 tonnes of CO2 as well as less NOx reductions
and less particulate matter. In particular, a stronger Network Manager
with powers to determine the broader airspace configurations as described in
scenario 3, would bring the greatest benefits. Even if we assume that only the
en-route part is affected and no improvements in the interfaces with airport
terminal areas can be achieved, that would correspond to potential 3% (instead
of 4.6%) route extension and CO2 reduction of 2.76 million tons[107]. 
Noise can be
greatly impacted by these scenarios if the Network Manager is extended to cover
departure and arrival routings. Benefits can be achieved both for noise and
environment, although a significant trade-off between emissions and noise
exists[108]. ATM
routings would still have close to a zero-sum impact[109] on
environment, even if the Network Manager functions were extended to departure
and arrival routings.

6.2.4                
Assessment of impacts on competitiveness of EU
aviation sector vis-à-vis the aviation sector of third countries

The aviation
sector is globally in a state of transformation and modernisation, so any
comparison can be done against a moving target. However the most relevant
comparison for EU is with the US system, which is comparable in most respects
and for which good data exists. Major modernisation efforts are underway in
both regions, but it is safe to say that scenario 3 would have the potential to
narrow the gap in the competitiveness of the ATM system considerably and most likely
achieve today's US levels of competitiveness by the 2025 target date.

6.2.5                
Assessment of impacts on the non-EU operators

Under ICAO
rules third country airlines enjoy access to EU airspace, with no major
hindrances. Any improvement in the competitiveness of the EU ATM system would
benefit each airline flying in the EU. This benefit would be proportionate to
the amount of miles flown in EU airspace.

6.2.6                
Assessment of impacts on micro, small and medium
sized enterprises 

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 ATS
charging system exempts aircraft that fly under Visual Flight Rules or which
have a maximum take-off weight below 2.5 tonnes. The improvements in
cost-efficiency would have a small positive impact on those small aircraft
operators that are covered by the charging rules, being proportional to the
amount of charges paid. There is however one particular area, where the
initiative may create new SMEs, which is unbundling. Even if it is more likely
that opening the market for the support services would lead to consolidation of
already large providers, it is also possible that SME's with an innovation edge
would have a chance in areas such as aeronautical information, meteorology or
communications services. Some SMEs could also participate in groupings of
companies competing for tenders initiated by the Network Manager.

6.3        
Comparison of
the policy scenarios

Analysis
presented in chapters 5 and 6 as well as Annex V is summarised in the table
below.
Figure
6-2: Comparison of policy scenarios
   || Policy Scenario 1 Baseline scenario || Policy scenario 2: Risk optimised[110] || Policy scenario 3 Performance optimised* 
 SUMMARY OF IMPACTS 
 Economic impacts:[111] ||   ||   ||   
 Cost efficiency || 0 || >€ 250 M p.a. || >€ 780M p.a. 
 Flight efficiency || 0 || >€ 1.6 Bn p.a. || >€ 2 Bn p.a. 
 Capacity/Delays || 0 || >€ 120 M p.a. || >€ 150 M p.a. 
 Administration costs[112] || 0 || € -7.9-9.7 M p.a. || €  -13.8-16.8 M p.a. 
 Macroeconomic impacts ||   ||   ||   
 GDP p.a. 2020/2030 || 0 || ~€ 600 M/ €700 M || ~€ 750 M/€ 900 M 
 Employment 2030 || 0 || ~+10 000 || ~+13 000 
 Of which airlines employment 2020/2030 || 0 || + || ~+500/+3000 
 Social Impacts: ||   ||   ||   
 Employment and working Conditions for the workers in ||   ||   ||   
 NSAs || 0 || + || ~+80 jobs 
 ANSP's || 0 || ~ -3400 || - ~ -9400 
 Safety || 0 || + || ++ 
 Environmental impacts ||   ||   ||   
 Noise || 0 || 0 || 0 
 Emissions || 0 || ++ || ++ 
 EFFECTIVENESS/ EFFICIENCY/ COHERENCE 
 Effectiveness: ||   ||   ||   
 Specific objectives: ||   ||   ||   
 SO1: Improve performance of ATS in terms of efficiency || 0 || ++ || +++ 
 SO2: Improve utilisation of ATM capacity || 0 || + || + 
 Efficiency excluding macro-economic impacts || 0 || Net benefits  ~ € 1960 M p.a. || Net benefits  ~ € 2915 M p.ap 
 Coherence || 0 || + || ++ 
As regards effectiveness,
the overall differences between the two scenarios are narrowed down by the
common choice of the performance scheme option 2.2. As regards improving the
utilisation of ATM capacity, there is no major difference between the two
scenarios. However, it is clear that the unbundling of ancillary services and
full separation of the NSAs from the ANSPs would produce important additional
efficiency benefits in the performance optimised scenario 3. The full
separation of the NSAs in scenario 3 reduces greatly the uncertainty as regards
the performance scheme, thus making it more likely that the NSAs will support
tighter targets and thus the full benefits of option 4.2 can be achieved. Even
if the difference in savings between the two scenarios is disregarded, the
safety benefit of introducing independent oversight of ANSPs through option 2.3
is alone enough to tip the scales in favour of the performance optimised
package. Furthermore, structural separation of support services will make it
more likely that the FABs will steer towards flexible forms of service
provision letting the market to find the most efficient providers.  It would
also allow to develop a supply of services which could be potentially
bought in by
the Network Managers for centralised service provision. 
Considering efficiency
the inputs required for the expected outputs in scenarios 2 and 3 are fairly
similar, except for some 20% higher administration costs in scenario 3.
However this additional administration cost triples the cost-efficiency gains,
so in the end scenario 3 has the highest efficiency score. Less easy to
quantify is the social cost of redundancies related to outputs. Restructuring
and modernisation in ATM sector would result in ANSP staff reduction by
about 3400 in scenario 2 and 9400 in scenario 3. Some new
jobs will be created at NSAs as well as by the external service providers
supporting ANSPs and the NM. Most importantly, the efficiency driven growth in the
aviation sector would induce 10 000 jobs in overall economy if scenario 2
is chosen and some 13 000 in the case of scenario 3.
As regards coherence
of the scenarios, both scenarios are coherent with horizontal EU policies as
described in section 3.4. In addition, the performance optimised scenario receives
a better evaluation for being clearer in creating an environment where the
roles of the different actors are well defined. ANSPs are free to focus on
improving their services (Network Manager being one of the ANSPs), NSAs and
airspace users steer the ANSPs in governance and performance scheme
respectively and act as checks on mismanagement, whilst the performance scheme
itself sets the targets based on the objective criteria and technical analysis.

In
conclusion, the performance optimised scenario 3 is considered to be the
preferred policy choice.

7          
Monitoring and Evaluation
7.1        
Evaluation arrangements

Regarding the
evaluation, the Commission is already obliged under art 12(2) of Regulation
549/2004 to review the application and effectiveness of SES rules at the end of
each performance scheme reference period. The intention is to continue with
this system. Next report is due for 2015 and the one after that 2020. As part
of these evaluations, 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. 

7.2        
Monitoring arrangements

The table
below lists key monitoring indicators to follow up the performance in terms of
specific objectives. Source of information would be the Performance Review Body
annual reports of the performance of the EU ATM system and the monthly reports
issued by the Network Manager. In its regular work the Performance Review Body
monitors the various trends and developments related to SES, and sets targets
on areas such as flight efficiency, cost-efficiency, environment and safety on
the service providers. The attainment of these targets is also monitored on a
constant basis and reports and recommendations are provided annually. Whilst
the system has been created primarily as a performance scheme, it also doubles
as a thorough monitoring and target setting mechanism for the overall
development of the SES.
Figure
7-1: Proposed monitoring indicators
 Specific objective || Monitoring indicators 
 SO1: Improve performance of Air Traffic Services in terms of efficiency || ·          Delays (min/flight) ·          ANSP-related costs to users ·          Reduction in average flight extensions ·          Reductions in emissions 
 SO2: Improve utilisation of air traffic management capacity || ·          En-route flight efficiency ·          Improvement in runway throughput at currently capacity constrained airports 
It is not
straightforward to define indicators for the follow up of the operational
objectives, which mostly relate to effectiveness of different governance
mechanisms. Therefore it is planned to assess the progress in terms of the
operational objectives based on:
·       
EASA
audit reports in Member States;
·       
accident
investigation reports;
·       
interviews
and consultations of various stakeholders;
·       
exchange
in different expert groups and committees, such as Single Sky Committee,
Industry Consultation Body, Expert group on social dimension, EASA Thematic
Advisory Group for ATM and the annual SES conferences. 
.
ANNEX
I
Abbreviations used
 ACC || Area Control Centre 
 ADF || Automatic Direction Finding (radio navigation aid) 
 AEA || Association of European Airlines 
 AIS || Aeronautical Information Service 
 ANS || Air Navigation Services 
 ANSP || Air Navigation Service Provider 
 ATCO || Air Traffic Controller 
 ATFM || Air Traffic Flow Management 
 ATM || Air traffic Management 
 CFMU || (Eurocontrol) Central Flow Management Unit 
 CNS || Communication, Navigation and Surveillance services 
 CTR || Control Zone (Controlled airspace immediately around an airport) 
 EASA || European Aviation Safety Agency 
 ERA || European Regional Airlines Association 
 FAA || (US) Federal Aviation Administration 
 FAB || Functional Airspace Block 
 ICAO || International Civil Aviation Organisation 
 IATA || International Air Transport Association 
 IFR || Instrument Flight Rules 
 NATS || National Air Traffic Services (The main UK ANSP) 
 NERL || NATS En-Route Limited (Part of NATS serving en-route traffic as opposed to aerodrome services etc.) 
 NM || Network manager 
 NSA || National Supervisory Authority 
 MET || Meteorological services 
 PRB || Performance Review Body 
 PRC || Performance Review Unit (precursor or PRB, which continues for non-EU States benefit) 
 PRR || (Annual) Performance Review Report (by the PRB/PRC) 
 PRU || Performance Review Unit (support unit to PRB/PRC) 
 R&D || Research and Development 
 RP || Reference period (in performance scheme) 
 RVSM || Reduced Vertical Separation Minima (allows for aircraft flying closer to each other at high altitudes) 
 SES || Single European Sky 
 SSC || Single Sky Committee 
 TMA || Terminal Area (Controlled airspace around the airport, above the CTR) 
 VOR || Visual Omnidirectional Range (radio navigation aid) 
 VFR || Visual Flight Rules 
ANNEX
II
Roles of different players in the ATM system 
The aim of
this annex is to quickly orientate the reader on the key actors involved in air
traffic management in Europe.
European
Commission
The European
Commission has been stimulating reforms to air traffic management since the
1990’s. In 1995 the Commission produced a white paper[113] that defined
a number of issues with ATM and proposed a ‘single ATM system for Europe’,
including a number of institutional changes. In the late 1990’s delays to
commercial aircraft were becoming unsustainable, and IATA developed a ‘5 point
plan’ the European Commission has been developing reforms to European Air
Traffic Management under the banner of the ‘Single European Sky’. The first
legislative package drew on advice from a High Level Group and came into effect
in 2004.  
EASA
The European
Aviation Safety Agency (EASA) was set up in 2003 to ensure a high and uniform
level of safety in civil aviation, through the implementation of common safety
rules and measures as well as covering environmental aspects and the
traditional Union goals of free movement of goods and people and a level playing
field amongst economic operators[114].
EASA effectively replaced the Joint Aviation Authorities, itself set up to
enable States to collaborate in the joint development of airworthiness rules
and regulations. EASA’s scope of activity has progressively been enlarged to
include also air operations, flight crew licensing, third country operators and
most recently in 2009 also air traffic management and airport regulation. With
this latest extension its scope was completed to cover all sectors of aviation
and progressively it has become the central co-ordinator of all technical rules
in these sectors.
Eurocontrol
At the time
of its founding in the early 1960's, Eurocontrol was initially intended to be an
intergovernmental organisation responsible for the entire upper airspace of the
six initial Member States, with plans for three international Air Traffic
Control centres to be set up. However, the majority of the European States were
not prepared to give up as much sovereignty over their own airspace as Eurocontrol
would have needed and the focus shifted from integration to cooperation[115]. Currently
Eurocontrol is active in areas such as SESAR related R&D, support to States
in implementation of the SES initiative, support to the EU in rule drafting and
oversight and most visibly it has been nominated to host both the EU
Performance Review Body and the Network Manager, where it provides vital EU
functions.
Eurocontrol
is defined by its convention, which has undergone several revisions since the
first convention in 13 December 1960. Article 2 of the 1997 revised convention[116] has not been
ratified and is somewhat outdated. Hence 2013 is likely to see the start of
work to draft an entirely new convention more in line with the organisations
current and future roles in support of the SES initiative and increasingly
focusing on operational tasks through the Network Manager, support to SESAR
deployment and the performance scheme.
Network
Manager
The Network
Manager was created by the SES II package[117]
and the Network Management implementing rule[118]
to perform four initial services, which are best exercised at Network level.
These functions are:
·       
Air
Traffic Flow Management (ATFM)
·       
Route
design
·       
Co-ordination
of radio frequencies amongst radio stations
·       
Co-ordination
of radar transponder codes
Further to
these it also hosts the European crisis co-ordination cell. The rules also
foresaw the possibility to extend the functions further, in particular to tasks
linked to the SESAR Master Plan. Already in its current shape, it carries some
important sub-tasks and for example the Network Strategy Plan and Network
Operations Plan have become important reference documents for operational
planning.
Air
Navigation Service Providers
Air
navigation service providers typically provide a range of services to support
the safe separation and expeditious conduct of flights. This includes air
traffic control of flights in "controlled airspace" and other
services such as "flight information services" outside of control
services. As defined by ICAO, Air navigation services comprise air traffic
management (ATM), communications, navigation and surveillance systems (CNS),
meteorological services for air navigation (MET), search and rescue (SAR) and
aeronautical information services (AIS). These services are provided to air
traffic during all phases of operations (approach, aerodrome and en route).
Air traffic
management is further divided into air traffic services, airspace management
and air traffic flow management. Of these air traffic services are the central
block and include air traffic control (en-route, terminal and aerodrome),
flight information services, etc.
Airspace
Users
The airspace
users include commercial air transport operators (scheduled and charter
airlines, freight, air taxi), business aviation (private operators), military/State
aircraft and general aviation (mostly private and recreational aviation). When
flying under instrument flight rules, all aircraft above 2 tons maximum weight
pay route charges which are proportional to the distance travelled and aircraft
weight. These charges are collected by the central route charges office, a
centralised service managed by Eurocontrol.
The Military
have a number of airspace needs, not least the need for temporary segregated
areas (TSAs) in which to train, the need to conduct "air policing"
and transit within and across Europe. Training areas are typically close to
military aerodromes and there are some examples of cross-border areas. The
"Flexible Use of Airspace" concept aims to ensure that when military
airspace is not required then it is made available to civilian flights.
ANNEX
III
Overview of SES legislation

1         
Overview

The European Commission
initiated the SES framework in 2000, after severe delays to flights in Europe
in 1999. The main objective was to reform air traffic management (ATM) in
Europe to cope with a sustained air traffic growth and provide the services
under the safest, more cost- and flight-efficient and environmentally friendly
conditions. This implied de-fragmenting the European airspace, reducing delays,
increasing safety standards, improving the performance of air navigation
services and flight efficiency. 
The development towards
a European Single Sky has taken place through two consecutive regulatory
packages, SES I and SES II.

1.1        
SES I

The legislative package
adopted in 2004 comprised four basic regulations, which reinforced safety and
fostered the restructuring of European airspace and air navigation services. 
1.      The Framework
Regulation
(EC No 549/2004) - laying down the framework for the creation of the Single
European Sky;
2.      The Service
Provision Regulation (EC No 550/2004) - on the provision of air
navigation services in the Single European Sky;
3.      The Airspace
Regulation
(EC No 551/2004) - on the organisation and use of airspace in the Single
European Sky;
4.      The
Interoperability Regulation (EC No 552/2004) - on the interoperability of
the European Air Traffic Management network.
The four regulations are
described in more detail in chapter 2 of this Annex.  
This framework is
supplemented by more than 20 Implementing Rules and Community Specifications
("technical standards") adopted by the European Commission, starting
from 2005, as indicated on the Figure below. These implementing tools   deal
with interoperability of technologies and systems, Flexible Use of Airspace, 
establishment of the performance scheme, the charging scheme, Air Traffic
Control Office licensing,  the management and operation of the network etc.
Key achievements of the
first SES package include:
·       
A
legal and institutional framework for the Single Sky, including the
establishment of the Single Sky Committee and Industry Consultation Body
·       
Functional
separation of service provision from regulation, by means of the establishment
of National Supervisory Authorities
·       
Harmonisation
in licensing of controllers
·       
Transparency
of charges
·       
Advances
in the efficient use of airspace, through the concept of flexible use of
airspace
·       
Stimulation
of innovation via the SESAR programme.
 January 2013 

1.2        
SES II

The four
Regulations adopted in 2004 were revised and extended in 2009 with Regulation
(EC) 1070/2009[119]
aiming at increasing the overall performance of the ATM system in Europe (the
SES II Package). 
SES II proposed changes in four
domains:

1.2.1       
Regulating performance

The Commission proposes three
measures under this pillar:
1.      Introducing the Performance Scheme[120] to drive performance of the ATM
system. This pillar
included the establishment of the Performance Review Body (PRB), an independent
performance review body, who monitors and assesses the performance of the
system and proposes EU wide targets for delays, cost reduction and the
shortening of routes. These objectives are then approved by the Commission and
passed on to national supervisory authorities who organise consultations to
agree binding national and regional objectives.
·       
Facilitating
the integration of service provision: Functional airspace
blocks (FABs) are bottom-up initiatives led by the States to be established by
the end of 2012, as provided by the Service Provision Regulation. FABs aim at
an enhanced cooperation between the air navigation service providers and the
national supervisory authorities to de-fragment the airspace and obtain the
operational efficiency gains through such strategies as common procurement,
training and optimisation of air traffic controllers resources. The service
provision Regulation (Regulation (EC) N° 550/2004) as amended by Regulation
(EU) N° 1070/2009 defined criteria for FABs. The revision’s aim was to turn the
current initiatives for FABs into genuine instruments of regional integration
to achieve performance targets.
·       
 Strengthening
the network management function. The Network Manager is
a centralised function at EU level to carry out the management of the ATM
network functions (airspace design, flow management) and management of scarce
resources (transponder code allocations, radio frequencies) as defined in
Commission Regulation (EU) N° 677/2011[121].
The Network Manager should complete the performance framework and comprises a
range of tasks, including European route network design, slot coordination and
allocation and management of the deployment of the Single European Sky ATM
Research (SESAR) technologies. This function has been entrusted to Eurocontrol
up to 2019.

1.2.2       
A
single safety framework

The
Commission stressed that the growth in air traffic, the congestion of air space
and aerodromes, as well as the use of new technologies justifies a common
approach to the development and application of harmonised regulation in order
to improve safety levels in air transport. Accordingly it was proposed to
extend the competence of the European Aviation Safety Agency (EASA) to the
remaining key safety fields: aerodromes, air traffic management and air
navigation services.

1.2.3       
Opening
the door to new technologies

The
Commission noted that the present air traffic control system had been pushed to
its limits, working with obsolescent technologies and suffering from
fragmentation. As a consequence, Europe had to accelerate the development of
its control system by implementing SESAR in order to increase safety levels and
traffic control capacity. In short, SESAR is dealing with the new generation
European air traffic management system.

1.2.4       
Managing
capacity on the ground

The
Commission insisted that investment is necessary to ensure that airport capacity
remains aligned with air transport management capacity and to preserve the
overall efficiency of the network. An Observatory, composed of Member States,
relevant authorities and stakeholders, was established to exchange and monitor
data and information on airport capacity as a whole, as well as to provide
advice on the development and implementation of EU transport legislation.

1.2.5       
Other
changes

SES II addressed also:
·       
Charging
- the
Charging Regulation[122]
on the en-route charging system laid down a legal framework of transparent
reporting of en-route charges and costs' components of the Member States, and
defined which costs may be charged. It also defined a legal base for financing,
through the charging system, of the "Common Projects" in the context
of the deployment of SESAR.
·       
Eurocontrol - an internal
reform of Eurocontrol had to align the government structures of this
organisation with the Single European Sky. 

2          
Detailed description of key elements
2.1        
The creation of the Single European Sky
2.1.1       
The Communication on the creation of the Single European Sky

The creation of the SES
was initiated by the Communication on the creation of the Single European Sky[123]. This
Communication aimed to lay outline principles for optimising air traffic
management for the benefit of all airspace users, whether civil or military,
airspace being a common asset which should be managed collectively regardless
of national borders.
This requires not only
joint technical and operational measures, but the collective management of
airspace, which should permit a substantial reorganisation of its structures.
In order to avoid any obstacles which may present themselves in the course of
implementing SES, the Commission set up two specific working frameworks:
·       
dialogue
will be opened with the two sides of industry, as they will be using and
operating the single sky,
·       
a
high-level group will be set up under the chairmanship of the Member of the
Commission responsible for transport, bringing together those responsible for
air traffic management in the Member States.
The following action was
proposed:
·       
evaluating
the performance of the European air traffic management systems
·       
developing
the capacity of aeronautical infrastructure
·       
planning
capacity
·       
developing
incentives
·       
carrying
out research and technological development
·       
standardising
systems.

2.1.2       
Framework for
creation of the Single European Sky

The objective of the
Framework Regulation[124]
was to enhance safety standards and overall efficiency for general air traffic
in Europe, to optimise capacity meeting the requirements of all airspace users
and to minimise delays. 
To that end it included
the following main provisions:
·       
National
supervisory authorities - EU countries must, jointly or individually,
nominate or establish one or more bodies as their national supervisory
authorities to perform the tasks assigned to such authorities. These
authorities must be independent of air navigation service providers.
·       
Single
Sky Committee - is established on the entry into force of this regulation
to assist the Commission with management of the Single European Sky and make
sure that due account is taken of the interests of all categories of users. It
consists of two representatives of each EU country and is chaired by a
representative of the Commission.
·       
Military
issues -
the EU countries adopted a general statement on military issues related to the
Single European Sky. According to this, they will enhance civil/military cooperation to the
extent deemed necessary by all EU countries concerned.
·       
Industry
consultation body - the industry consultation body advises the
Commission on the implementation of the Single European Sky. It is made up of
representatives of air navigation service providers, associations of airspace
users, airport operators, the aviation manufacturing industry and professional
staff representative bodies.
·       
The
expert group on social dimension – brings together the ATM sector social
partners to study and advice the Commission on the social dimension
·       
Implementing
rules -
Eurocontrol is involved in the development of
implementing rules which fall within its remit, on the basis of mandates agreed
by the Single Sky Committee.
·       
Performance
review -
the establishment of a
performance scheme aims to improve the performance of air navigation
services and network functions in the Single European Sky. It will consist of:
-            
European-wide
performance targets in the key areas of safety, environment, capacity and
cost-efficiency;
-            
national
plans including performance targets to ensure consistency with the
European-wide performance targets;
-            
periodic
review and monitoring of the performance of air navigation services and network
functions.
·       
Safeguards
- this
regulation does not prevent EU countries from applying measures needed to safeguard essential
security or defence policy interests.

2.1.3       
Provision of air
navigation services in the Single European Sky

To create the
Single European Sky, measures are needed to ensure the safe and efficient
provision of air navigation services consistent with the organisation and use
of airspace. A harmonised framework needs to be established for the provision
of such services in order to respond adequately to demand from airspace users
and to regulate air traffic safely and efficiently. To that end the Service
Provision Regulation[125]
established common requirements to
ensure that air navigation services are provided safely and efficiently, on a
continuous and interoperable basis, throughout the EU. It introduced a
harmonised system of certification and laid down rules for designating service
providers.
In was established via
following main provisions:
·       
National supervisory
authorities - must ensure appropriate supervision of the application of
the regulation, particularly with regard to the safe and efficient operation of
air navigation service providers (public or private entities providing air
navigation services) which provide services relating to the airspace falling
under the responsibility of the European Union (EU) countries. Each national
supervisory authority must organise proper inspections and surveys to check
compliance with the regulation’s requirements. The air navigation service
provider concerned must facilitate this work. However, the national supervisory
authorities may delegate the inspections and surveys to recognised
organisations meeting certain requirements.
·       
Licensing of
controllers - once the regulation has entered into force, the
Commission had to, if appropriate, present a proposal on the licensing of
controllers to harmonise the licensing systems for controllers, increase the
availability of controllers and promote mutual recognition of licences.
·       
Common
requirements for the provision of air navigation services
must include the following: technical and operational competence and
suitability, systems and processes for safety and quality management, reporting
systems, quality of services, financial strength, liability and insurance
cover, ownership and organisational structure (including the prevention of
conflicts of interest), security, and human resources (including adequate
staffing plans).
·       
Certification
of air navigation service providers - all provision of air
navigation services within the EU is subject to certification by EU countries.
Certificates must specify the rights and obligations of air navigation service
providers, including compliance with the common requirements and
non-discriminatory access to services for airspace users, with particular
regard to safety.
·       
Designation of
air traffic service providers - to ensure the provision
of air traffic services on an exclusive basis within specific airspace
blocks (airspace
of specified dimensions within which air navigation services are provided) in
respect of the airspace under their responsibility, EU countries must designate
an air traffic service provider holding a valid certificate.
·       
Functional
airspace blocks - EU countries must ensure the implementation of
functional airspace blocks to reach the necessary capacity and efficiency of
the air traffic management network within the Single European Sky, maintaining
a high level of safety and a reduced environmental impact. Functional airspace
blocks can only be established by mutual agreement from all EU countries and, where appropriate,
non-EU countries responsible for any airspace included in the functional
airspace block. To facilitate the implementation of the functional airspace
blocks, the Commission may designate a functional airspace blocks system coordinator who will be responsible for overcoming
any difficulties encountered in the negotiation stages, thereby speeding up the
entire process. 
·       
Relations
between service providers - air navigation service providers may
avail themselves of the services of other service providers that have been
certified in the EU.
·       
Transparency of
accounts - air navigation service providers must draw up, submit to
audit and publish their financial accounts.
·       
Access to and
protection of data - operational data (information relating to all
flight phases) must be exchanged in real time between all air navigation
service providers, airspace users and airports to facilitate their operational
needs.
·       
Charging
schemes - the charging scheme must be based on account of the air
navigation service costs incurred by service providers for the benefit of
airspace users. The following principles must be applied when establishing the
cost-base for charges:
-            
the
cost to be shared among airspace users is the determined cost of providing air
navigation services;
-            
the
costs to be taken into account in this context are those assessed in relation
to the facilities and services provided for and implemented under the
International Civil Aviation Organisation (ICAO) Regional Air Navigation Plan,
European Region;
-            
the
cost of different air navigation services must be identified separately;
-            
cross-subsidy
is not allowed between en-route services and terminal services. Cross-subsidy
is only allowed between different air navigation services in the above
categories when justified for objective reasons;
-            
transparency
of the cost-base for charges must be guaranteed.

2.1.4       
Air traffic
management: Organisation and use of airspace in the Single European Sky

In order to
ensure that the Single European Sky is an airspace without frontiers, the Commission
proposed in the Airspace Regulation[126]
on the organisation and management of airspace to set up a unique flight
information region by merging all the national regions into a single portion of
airspace within which air traffic services will be provided according to the
same rules and procedures.  This should help to optimise the use of European
airspace, reduce delays and promote the growth of air transport. The key
elements of the Airspace Regulation are described below.
European
upper flight information region (EUIR)
Under the
Chicago Convention, the concept of Flight Information regions (FIRs) defines
homogenous regions of airspace, which should efficiently cover air route
structures. Before air frontiers were fixed by reference to land and sea
frontiers. Against this background, the International Civil Aviation
Organisation (ICAO) recommended that the delineation of internal airspace
should be related to the need for efficient service rather than to national
boundaries.
Accordingly,
the Single European Sky arrangements provided for a single European upper
flight information region (EUIR). The EUIR encompasses the upper airspace
falling under the responsibility of the EU countries and, where appropriate,
will include adjacent airspace of European countries that are not EU members.
The creation
of a single flight information region in upper airspace enabled this space to
be reconfigured into delimited control areas without regard to national
frontiers, thereby ensuring the more efficient use of airspace, systems and
personnel.
To harmonise
aeronautical information within the area of the EUIR, steps were taken to
ensure the creation of a single source for the publication of such information,
taking account of relevant ICAO requirements. The Commission is responsible for
ensuring the development of an aeronautical information infrastructure in the
form of an electronic integrated briefing portal with unrestricted access to
interested stakeholders.
Network management and design
In order to
support initiatives both on a national level and on the level of functional
airspace blocks, the air traffic management network functions should allow
optimum use of airspace and ensure that airspace users can operate preferred
trajectories, while permitting maximum access to airspace and air navigation
services.
Flexible use of airspace
As regards
the use of airspace for military purposes, the Commission recommended the
adoption of criteria permitting the application, first of all in upper airspace
and then in lower airspace, of the concept of flexible use of airspace, as
devised by Eurocontrol. The Commission urged EU countries and Eurocontrol
to take appropriate measures to ensure uniform application of the provisions
governing civil-military air traffic service provision.
Coordination
had to be increased between the civilian and military authorities, in
particular for the allocation and efficient use of airspace for military
purposes, including the criteria and principles which should govern allocation
and use, and in particular access for civilian flights.
A safeguard
clause had to enable EU countries to request the suspension of the application
of the EU rules in the event of conflict with national military requirements.

2.1.5       
Interoperability of
the European air traffic management network

Differences
between national technical specifications used for tenders has led to
fragmentation of the market and systems and make industrial cooperation at EU
level more difficult. 
The aim of
the Interoperability Regulation[127]
was to define common requirements to guarantee interoperability between the various air traffic
management systems used:
·       
to
achieve interoperability between the different systems, constituents and associated procedures in the
European air traffic management network;
·       
to
ensure the introduction of new agreed and validated concepts of operations and
technology in air traffic management.
According to
the Interoperability Regulation, the European air
traffic management network, its systems and their constituents must meet essential
requirements. These are of two kinds:
·       
general
requirements: seamless operation, support for new concepts of operation,
safety, civil/military coordination, environmental constraints, principles
governing the logical architecture of systems and principles governing the
construction of systems;
·       
specific
requirements: systems and procedures for airspace management,
systems and procedures for air traffic flow management, systems and procedures
for air traffic services, communications systems and procedures for
ground-to-ground, air-to-ground and air-to-air communications, navigation
procedures, surveillance systems and procedures, systems and procedures for
aeronautical information services and for the use of meteorological
information.
The implementing rules for interoperability had to:
·       
determine
any specific requirements, in particular in terms of safety;
·       
describe,
where appropriate, any specific requirements, in particular regarding the
coordinated introduction of new concepts of operation;
·       
describe
the specific conformity assessment procedures involving notified bodies to be
used to assess the conformity or suitability for use of constituents, as well
as for the verification of systems;
·       
specify
the conditions of implementation including, where appropriate, the date by
which all relevant stakeholders are required to comply with them.
Community specifications
could be:
·       
European
standards for systems or constituents, together with the relevant procedures,
drawn up by the European standardisation bodies; or
·       
specifications
drawn up by Eurocontrol on matters of operational coordination
between air navigation service providers.
Constituents
must be accompanied by a European Community (EC) declaration of conformity or
suitability for use. Before a system is put into service, the relevant air
navigation service provider must establish an EC declaration of verification,
confirming compliance, and must submit it to the national supervisory authority
together with a technical file.
Safeguards
Where the
national supervisory authority ascertains that a constituent or a system
accompanied by an EC declaration of conformity/verification does not comply
with the essential requirements for interoperability, it must restrict the
application of the constituent or prohibit its use. The EU country concerned
must immediately inform the Commission of any such measures, indicating the
reasons for it.
Where the
Commission establishes that the measures taken by the supervisory authority are
not justified, it can request the EU country concerned to ensure that they are
withdrawn without delay.

2.2        
A joint
undertaking to develop the new generation European air traffic management
system  (SESAR)

The SESAR
Regulation[128]
created a joint undertaking to ensure modernisation of the European air traffic
management system. The joint undertaking brought together EU research and
development efforts within the framework of the SESAR (Single European Sky Air
Traffic Management (ATM) Research) project.
The rationale
behind the SESAR initiative was that the current air traffic control systems
were close to becoming obsolete and were ill-suited for the rapid, economic and
reliable development of aviation in Europe. SESAR is the technological pillar
of the SES and an essential enabler for its implementation. SESAR was planned
in three phases:
·       
a definition phase (2005-2007), in which the air traffic
modernisation plan (or “ATM Master Plan”) has been developed to define the
different technological stages, priorities and timetables;
·       
a development phase (2007-2016), consisting of research, development
and validation activites relating to the new technologies and procedures which
will underpin the new generation of systems;
·       
a deployment phase (2014-2020), which will see the
large-scale production and implementation of the new technologies and
procedures.
The SESAR joint undertaking: activities,
statutes and financing
It
constitutes a public-private partnership, where the EU and Eurocontrol are
founding members, that makes it possible to rationalise and coordinate ATM
R&D efforts throughout the EU in a deployment oriented approach. The joint
undertaking allows leveraging and pooling funding and know-how and reducing
fragmentation created by similar national and regional projects and harnessing
the skills and innovation capacity of the private sector within appropriate
risk sharing arrangements with public entities.
The SESAR
joint undertaking is responsible for:
·       
organising
and coordinating development of the SESAR project, in accordance with the ATM
Master Plan;
·       
funding
the necessary activities, by combining and managing public and private funds;
·       
implementing
and updating the ATM Master Plan;
·       
organising
the technical research and development, validation and study work to be carried
out while avoiding its fragmentation;
·       
ensuring
project involvement by stakeholders from the air traffic management sector
(service providers, users, professional organisations, airports, manufacturers,
as well as the scientific community and institutions);
·       
supervising
the activities to develop common products identified in the ATM Master Plan
and, if necessary, launching specific invitations to tender.
The SESAR
joint undertaking, based in Brussels, is an EU body with a legal personality
and is being financed by contributions from its members, including private
firms. The EU’s contribution comes from the budgets of the framework programmes
for research and development and the trans-European networks

2.3        
Air
traffic flow management

The Air
Traffic Flow Regulation[129]
supplemented the existing SES legislation on air traffic management and aimed
to optimise the available capacity of the European air traffic management
network as well as to enhance the air traffic flow management processes through
the uniform application of specific rules and procedures within the airspace of
the Single European Sky.
This
regulation applied within the airspace
of the Single European Sky as
laid out in Regulation No
551/2004 and affected:
·       
all
flights intended to operate or operating as general air traffic and in
accordance with the instrument flight rules;
·       
air
traffic management.
This
regulation applies to the following parties involved in air traffic flow management
(ATFM) processes:
·       
operators
of aircraft;
·       
air
traffic service (ATS) units;
·       
aeronautical
information services;
·       
entities
involved in airspace management;
·       
airport
managing bodies;
·       
central
unit for air traffic flow management (ATFM);
·       
local
ATFM units;
·       
slot
coordinators of coordinated airports.
The planning,
coordination and execution of the ATFM measures undertaken by the above-mentioned
parties must be in accordance with the provisions laid out by the International
Civil Aviation Organisation (ICAO).
The main
provisions of the regulations are described below.
General obligations of European Union
(EU) countries
EU countries
had to ensure that the ATFM function is constantly available to the above list
of parties involved in the ATFM processes. EU countries had to also ensure that
the definition and implementation of ATFM measures complies with national
security and defence requirements of individual EU countries.
General obligations of ATS units
When applying
an ATFM measure, ATS units had to coordinate through the local ATFM unit with
the central unit for ATFM to ensure that the measure is selected with regard to
the optimisation of the overall performance effects on the EATMN.
ATS units had
to inform the central unit for ATFM of all events that may affect air traffic
control capacity or air traffic demand. ATS units had to also provide the
central unit for ATFM with various information and subsequent updates, including:
·       
availability
of airspace and route structures;
·       
air
traffic control sector and airport capacities;
·       
route
availability;
·       
deviations
from flight plans;
·       
airspace
availability.
The full list
of data must be made available to the above list of parties involved in ATFM
processes and provided free of charge to, and by, the central unit for ATFM.
General obligations of operators
Any relevant
ATFM measures and changes to filed flight plans had to be included in the
planned flight operation and the pilot had to be notified. When a flight plan
is suspended because the ATFM departure slot cannot
be met, the operator concerned had to arrange for updating or cancelling the
flight plan.
Consistency between flight plans and
airport slots
EU countries
had to ensure that, on request by an airport slot coordinator or managing body
of a coordinated airport, the central unit for ATFM or the local ATFM unit
provides them with the agreed flight plan of a flight operating at that
airport, prior to the flight taking place.
Obligations concerning critical events
EU countries
had to ensure the creation and publication of ATFM procedures for the
management of critical events to minimise disruption to the EATMN. To
prepare for critical events, ATS units and airport managing bodies will
coordinate the contingency procedures with the operators affected by such
critical events.
Monitoring of compliance with ATFM
measures
EU countries
had to ensure that airports adhere to ATFM departure slots and where the adherence is 80% or less
during a year, the ATS units at the airport concerned had to detail the actions
taken to ensure future adherence. The ATS unit at an airport is also
responsible for providing the appropriate information on any failure
to adhere to flight plan rejections or suspensions at that airport and to detail the
actions taken to ensure future compliance.
ANNEX
IV
Consultation of stakeholders
OVERVIEW OF
THE STAKEHOLDER CONSULTATION
Stakeholder consultation
process consisted of several elements, including bilateral meetings,
discussions in forums (such as the European Economic and Social Committee,
Social Dialogue, IATA Operations panel etc), public consultation and interviews
with some key stakeholders.

1          
List of stakeholders consulted throughout the
consultation process

Firstly, the following
organizations/persons responded to the public consultation:
·       
Representative
bodies at European level including: Air navigation service providers (ANSP)
(18), airlines (3), airport operators (3), manufacturing industry (2), other
civil airspace users (4), representative and/or professional associations (15),
trade unions (12) and miscellaneous respondents (9)[130]. 
·       
National
Supervisory Authorities (9): CAA Belgium, CAA UK, BAF DE, DGAC France, ENAC IT
·       
Member
States: Ministries (6) and military (2)
Secondly, the within the
framework of the impact assessment (IA) support study, 26 persons representing
certain key stakeholders, were interviewed: 
 Organisation 
 Association of European Airlines 
 Bundesaufsichtsamt für Flugsicherung DE 
 CAA Belgium 
 CAA UK 
 CANSO 
 DFS Germany 
 DGAC France 
 DSNA France 
 ENAC IT 
 European Aviation Safety Agency 
 European Transport Workers’ Federation 
 HIAL UK 
 IFATSEA 
 International Air Transport Association 
 International Federation of Air Traffic Controllers’ Associations 
 LFV Sweden 
 NATO 
 NATS UK 
 NAV Canada 
 Performance Review Board 
 Performance Review Unit 
 SESAR Joint Undertaking 
The answers of the
interviews are incorporated into the IA support study and have thus informed
the Commission while preparing their analysis in the IA report.
Thirdly, on 21 January
2013, a public hearing on SES II+ was organised by the European Economic and
Social Committee. Participation at the public hearing was open to all
interested stakeholders, who were also able to present their questions and
comments to different speakers. The latter included[131]:
·       
Airline
representatives (Brussels Airlines, Ryanair)
·       
Defence
community (European Defence Agency)
·       
Service
providers (Italian Air Navigation Service Provider)
·       
Trade
unions (European Transport Workers` Federation) 
·       
Public
sector (German Ministry of Transport, Polish Ministry of Transport, Belgian
National Supervisory Authority)
·       
Airports
Council International Europe
·       
European
Aviation Safety Agency
·       
SESAR
Joint Undertaking.
The Commission took note
of the debate from all the sides.
Note on the discussion
can be found at the end of this Annex.

2          
The public consultation

A public consultation
was launched by the European Commission on 21 September 2012 in the form of an
electronic questionnaire, with both multiple choice and open questions.
Questionnaires had to be returned by 13 December 2012 – overall duration 12
weeks. 

2.1        
Coverage

A total of 83 responses
were been received, representing all stakeholder groups, though the views of
the service providers have to some extent prevailing weight (22% of
respondents). Closely followed the representative and/or professional
organisations (18%) and trade unions (14%). Other stakeholder categories were
represented to a limited extent. 
Figure IV- 1: Breakdown of
respondents by stakeholder group
Figure IV- 2: Relative
share of different responses

2.2        
Results
of the public consultation

The analysis below gives
an overview of the replies to the questions which were posed to stakeholders
during the public consultation. It has to be noted, that these differ to some
extent from the intervention framework presented in the Commission IA. This is
due to the fact that the Commission thinking has evolved throughout the policy
preparation process, including the adjustments made according to the results of
the stakeholder consultations. 

2.2.1       
Stakeholder views on problems 

Figure IV- 3:  To which
extent are the objectives of the Single European Sky initiative to improve the
efficiency in organisation and management of the European airspace already
achieved?
Less than 5% of
stakeholders report that the objectives of the Single European Sky initiative
are fully met (mostly these ministries and some representative and/or
professional associations). The majority of stakeholders, about 70%, believes
the objectives are met to some extent. The airlines and the other civil
airspace users are the least positive about the effects of SES, with a large
percentage of stakeholders reporting the objectives have not been achieved at
all. 
Figure IV- 4: Indication
on which policy area(s) in particular the objectives are not met.
 Number of responses (absolute) || ANSP || Airline || Air operator || Manuf. industry || Military || Ministry || NSA || Other || Other civil space user || Repr/prof. association || Trade union || Total 
 Performance Scheme || 7 || 2 || 2 || 2 || 0 || 3 || 4 || 4 || 2 || 6 || 2 || 34 
 Functional Airspace Blocks || 8 || 3 || 2 || 1 || 0 || 3 || 4 || 6 || 2 || 6 || 1 || 36 
 Organisation and use of airspace || 8 || 3 || 1 || 1 || 2 || 5 || 6 || 5 || 3 || 8 || 2 || 44 
 Charging scheme || 0 || 0 || 0 || 0 || 2 || 0 || 0 || 0 || 0 || 0 || 0 || 2 
 SESAR || 1 || 0 || 1 || 0 || 0 || 2 || 0 || 0 || 0 || 5 || 7 || 16 
 Safety and security requirements || 2 || 0 || 1 || 1 || 2 || 2 || 2 || 1 || 1 || 11 || 12 || 35 
 Other || 9 || 0 || 0 || 0 || 0 || 0 || 0 || 1 || 0 || 1 || 1 || 12 
 Network manager || 2 || 1 || 0 || 0 || 0 || 1 || 1 || 2 || 0 || 0 || 0 || 7 
 Interoperability || 12 || 2 || 1 || 0 || 0 || 3 || 4 || 6 || 3 || 10 || 8 || 49 
 Human factor || 9 || 2 || 0 || 1 || 2 || 3 || 2 || 2 || 1 || 11 || 10 || 43 
 Total || 58 || 13 || 8 || 6 || 8 || 22 || 23 || 27 || 12 || 58 || 43 || 278 
According
to the service providers, the objectives are not met in most of the policy
areas, except for the charging scheme, SESAR, safety/security and the network
manager. This opinion is mostly shared by the representative and/or
professional association and trade unions, who however remain concerned also
about safety/ and security requirements. Most stakeholders report that the
objectives in interoperability, human factor and organisation/use of airspace
have not been met.
The
service providers indicated that there is still work required in a number of
policy areas in order to fully achieve the SES objectives, but much of this can
be achieved through the reinforcement of existing regulations rather than
creating more rules. The project of SES was perceived still too bureaucratic.
Another
concern of the service providers is that the FABs still need a stronger
institutional framework and common management system. Airlines also report that
FABs do not comply with the legal obligations and are not delivering the
expected benefits. 
Figure IV- 5: Indication
on which policy area of the Single European Sky initiative it is considered
necessary that further work is being done:
 Number of responses (absolute) || ANSP || Airline || Air operator || Manuf. industry || Military || Ministry || NSA || Other || Other civil space user || Repr/prof. association || Trade union || Total 
 Performance Scheme || 13 || 2 || 2 || 2 || 0 || 3 || 3 || 4 || 1 || 7 || 3 || 40 
 Functional Airspace Blocks || 1 || 0 || 0 || 0 || 0 || 0 || 1 || 1 || 2 || 1 || 0 || 6 
 Organisation and use of airspace || 8 || 3 || 1 || 2 || 0 || 2 || 4 || 5 || 2 || 8 || 2 || 37 
 Airports || 8 || 2 || 1 || 1 || 2 || 3 || 5 || 3 || 2 || 7 || 2 || 36 
 Charging scheme || 0 || 0 || 1 || 0 || 2 || 0 || 1 || 0 || 0 || 0 || 0 || 4 
 SESAR || 2 || 0 || 0 || 0 || 0 || 2 || 2 || 0 || 0 || 5 || 7 || 18 
 Safety and security requirements || 6 || 2 || 0 || 1 || 0 || 0 || 0 || 1 || 1 || 12 || 11 || 34 
 Other || 9 || 2 || 0 || 1 || 0 || 1 || 0 || 0 || 0 || 5 || 1 || 19 
 Network manager || 1 || 1 || 0 || 0 || 0 || 1 || 1 || 2 || 0 || 0 || 1 || 7 
 Interoperability || 11 || 2 || 1 || 2 || 0 || 2 || 4 || 6 || 2 || 12 || 9 || 51 
 Human factor || 8 || 2 || 0 || 1 || 0 || 2 || 3 || 3 || 1 || 13 || 11 || 44 
 Total || 67 || 16 || 6 || 10 || 4 || 16 || 24 || 25 || 11 || 70 || 47 || 296 
According to the service
providers, further work should most importantly be done in the area of the
performance scheme, organisation and use of the airspace, airports,
interoperability, the human factor and "other areas". Representative
and/or professional associations and trade unions put a larger emphasis on the
safety and security requirements. 
Service providers added
that there are several overlaps and gaps in the legislative framework, which
have emerged as a result of the aggregation of the different SES initiatives.
Therefore a harmonization and recast of legislation is expected. In case of the
performance scheme, stakeholders stressed necessity to respect the expert views
of all stakeholders in setting the targets (which should be achievable, simple
and realistic) as well as in evaluating the performance.

Figure IV- 6: There is still a tendency to
support maintaining the status quo in service provision, instead of focusing
more on the value-added created for airspace users

Stakeholder opinions on
this statement ere widely divided. Some, like trade unions and professional
associations perceive this as being of low relevance, while the service
providers perceive this as being of medium relevance. The airlines and the
manufacturing industries perceive this issue as highly relevant.

Figure IV- 7: Increased co-operation to seek synergies between the service providers
is needed to bring benefits to airspace users both inside and outside FABs.
Working in isolation would keep the service providers from achieving their full
potential as a network industry

A bit more than half of
stakeholders believe this to be of high relevance. Most of these stakeholders
are the service providers. The NSAs report this issue being of medium relevance.

Figure IV- 8: Due to the current economic crisis, the National Supervisory
Authorities (NSAs) do not have the required resources to efficiently oversee
the service providers and enforce SES rules

Only a small number of
stakeholders fully agree with this statement (the airport operators,
manufacturing industries). NSAs themselves mostly agree with this statement.
Within the larger groups of service providers, professional associations and
trade unions, stakeholders believe this is true to some extent. The airlines
and militaries find this statement being not true. 

2.2.2       
Stakeholder views on policy objectives
Figure IV- 9: Ensure the performance and
efficiency of service provision

The performance and
efficiency of service provision is of high relevance for half of stakeholders.
These are the service providers, airlines, airport operators and manufacturing
industries. About 20% of stakeholders report this of low relevance; most of
these are trade unions, representative and/or professional associations and
ministries.

Figure IV- 10: Optimisation of service provision requires an increased focus on
value added for airspace users and an increased willingness to flexibly change
old business models

30% of the total
stakeholders believe this to be of high relevance (mostly the airlines, airport
operators and manufacturing industries). About 25% believe this to be of medium
relevance (mostly the service providers, and half of the NSAs). 

Figure IV- 11: Improving the governance of the performance scheme

About a half of
stakeholders agree with the objective of improving the governance of the
performance scheme, although about 40% (many representative and/or professional
associations, trade unions and all military and other civil airspace users) think
that this not a relevant objective.  At the same time all operators (airlines,
industry and airports) find this objective very relevant. 

Figure IV- 12: Increasing the competitiveness of the air transport system requires
continuous focus on ensuring that the performance targets remain sufficiently
ambitious

On this question, the
opinions are quite different. 20% of the total stakeholders believe this to be
of high relevance (mostly the airlines, airport operators and manufacturing
industries). About 30% believe this to be of medium relevance (mostly the
service providers and half of the NSAs). 

Figure IV- 13: Improving the functionality
of functional airspace blocks and other co-operation arrangements

The majority of
stakeholders perceive this objective as highly relevant or medium relevant.
Only 10% of the total respondents believe the objective is of low relevance,
which are mostly the other civil airspace users, the military and a small share
of the representative and/or professional associations.
Figure IV- 14: The FABs
should be increasingly focused on functionality and flexible search for
synergies, instead of rigid structures to ensure new efficiencies and economies
can be realised
The majority of
stakeholders stated this to be of high relevance (service providers, the
majority of the professional associations and some of the smaller stakeholder
groups). The majority of trade unions also perceive this of low relevance.

Figure IV- 15: Ensure the alignment of various policy initiatives

Half of stakeholders
perceive the alignment of various policy initiatives as highly relevant. 

Figure IV- 16: Clarifying the roles of the various involved organisations in
European ATM rulemaking

The majority of
stakeholders, about 60%, believe clarifying the roles of the various involved
organisations is of high relevance, though trade unions and representative
and/or professional associations find it less pertinent.

Figure IV- 17: Ensuring coherent oversight and enforcement of rules

About 45% of respondents
indicate that enforcement and follow up are of high relevance in the SES
policy. These are mostly the airlines, airport operators and manufacturing
industry. On the other hand, the professional associations, trade unions and
the other civil airspace users find this objective being of low relevance.

Figure IV- 18: Ensuring their policies are decided through a single planning
framework and that they all focus on a single agreed objective

Again the majority of
stakeholders reported this of high relevance. The small mid-group perceiving
the medium relevance consists of mostly of the ministries and the NSAs.

Figure IV- 19: Links between the performance scheme, the FABs, the Network Manager
and SESAR deployment need to be further reinforced

About half of
stakeholder perceives this objective as of high relevance (service providers
and the smaller groups of stakeholders) while again representative and/or
professional associations and trade unions do not always share this view. 

2.2.3       
Stakeholder
views on possible policy options

Figure IV- 20: Unbundle
support services from the core bundled ANSPs and opening up the market for them
The majority of trade
unions and representative and/or professional associations, but also some
ministries, civil airspace users and ANSPs do not agree at all, which is 30% of
the total stakeholders. The majority of the ANSPs agree to some extent. For
other stakeholder groups views are dispersed, while overall only about 20%
agree fully (including all airlines). An interesting split in States position
is witnessed with ministries being equally split amongst the choices, but NSAs
exhibiting a preference for at least some unbundling.
Figure IV- 21: More
involvement of all airspace user groups in ANSP governance to ensure focus on
stakeholder value.
A large share of
stakeholders believes that involving all airspace users in ANSP governance is
not a good idea. These are in particular stakeholders from the ANSPs, the
representative and/or professional associations and trade unions. The military,
other civil airspace users and the manufacturing industries agree fully with
this proposal, but this is only 15% of the total stakeholders. Interestingly
the airlines – who have given most anecdotal evidence of lacking influence –
are evenly split, with a third of them opposing all additional airspace user
involvement in the ANSPs governance. This could reflect the difficulty of operators
in allocating necessary resources for participation.
Figure IV- 22: Strengthen
the role and organizational independence of National Supervisory Authorities.
Possibly by improving co-operation between the NSAs or going to the European
Aviation Agency (EAA) for overall co-ordinating and support. 
Only 5% of stakeholders
fully agree with an extended co-ordinating role of new EAA, this being
primarily some ANSPs and the military respondents. Another 15% mostly agree,
which is spread out over all stakeholder groups. Trade unions are most
negative, while representative and/or professional associations, ministries,
but also airlines are not very convinced about further need for centralisation
either.
Note: In analysing these
responses it should be noted that the public consultation was formulated at a
relatively early stage and its responses and the subsequent interviews – in
particular for this question – have helped to reformulate and
modify the policy options. Therefore the creation of a European Aviation
Authority (EAA) is no longer even assessed, instead EASA's role will be
streamline along the lines of the principles put in place during SES
development. 
Figure IV- 23: Give the
Performance Review Body a more independent and important role in setting up and
enforcing the performance scheme.
25% of stakeholders (mainly
airlines and ANSPs) report that the PRB should have a more independent role. On
the other hand, more than 30% of stakeholders (mostly trade unions) indicate
PRB status should not be changed.  The views of other stakeholders are spread.
Figure IV- 24: The
timescale of the current performance target setting process is too long and
problematic for implementation of the scheme?
.
Trade unions strongly
disagree, professional associations also are not favourable, while the views of
other stakeholder groups vary.  Only about a quarter of stakeholders
"fully" or "mostly" agree. About 30% of stakeholder agree "to
some extent". This is mostly the opinion of ANSPs, airlines and
ministries. It is particularly interesting to note that of the Member State's
ministries, which are central to target setting, none disagree totally with the
proposal and even amongst the NSAs almost 90% agree either fully or to some
extent with this statement.
Figure IV- 25: In order to
revitalize the FAB initiative we could allow more industry led cooperation at
service provider level through different forms like flexible alliances and
cross-border mergers. 
The ANSPs fully agree
with this proposal whereas trade unions do not agree at all, just like half of
the representative and/or professional associations. A large percentage of
stakeholders (30%) do not have an opinion.
Figure IV- 26: Airspace
users should be given a strategic management role in the Network Manager e.g.
on network co-ordination, planning and allocation. The current situation of a
purely consultative role is inefficient.
.
Trade unions and
representative and/or professional associations prefer the current situation,
as well 40% of the ANSPs. This counts for more than 30% of total stakeholders.
Another 30% (mostly NSAs) indicates that there can be some extension of
industry involvement, but mainly on a consultative level. The ANSPs form the
largest share of stakeholders who believe that users could be given a more
strategic role. Majority of airspace users of course supports an extension of
their role towards stronger strategic partner of the Network Manager, but even
amongst them a third prefers the current situation, perhaps reflecting the
difficulty of allocating resources to support the participation.
Note: The following two
questions do not form part of the impact assessment as they are determined by previous
policy choices in SES II, or by the necessity for adapting the text to
Icelandic membership. However they are included here for the sake of
completeness  of this overview.
Figure IV- 27: Extend
selected parts of the SES legislation also to the parts of ICAO North Atlantic
(NAT) region that are under the responsibility of SES States.[132]
Almost 40% of
stakeholders do not have an opinion on this matter. This is half of the ANSPs,
half of the NSAs and a small number of stakeholders in the other categories.
Only airlines and military fully agree. This outcome was expected, given that
most States do not provide services over the ICAO NAT region high-seas.
Figure IV- 28: Address the
overlap between SES legislation and EASA legislation through a single policy
framework, as in other areas of aviation (e.g. licensing or air operations) to
ensure a single globally applied approach?[133]
Around 50% of stakeholders
believe that this area should be addressed. These are mostly the ANSPs,
airlines and half of NSAs. 30% of stakeholders (mostly representative and/or
professional associations and trade unions) state that this issue should not be
addressed. Some 15% do not have an opinion. In retrospect it may be considered
that the question was somewhat misleading as it did not explain that the policy
choice was already made in 2009 and at this stage focus is only on the specific
implementation of the existing framework. However it is positive to note that
those most impacted by the current regulatory framework believe the choice made
in SES II should be carried through.
Appendix to Annex IV
Note on the discussions in
the European Economic and Social Committee hearing 
21 January 2013
Welcoming
provided by Brian Curtis, president of the EESC study group on
SESII+ and Introductory remarks by Jacek Krawczyk, Vice-President EESC.
Keynote speeches
·       
Siim
Kallas,
Vice-president, European Commission
Responding to
the cost and capacity crisis in the 1990s, the first SES proposal wanted to
offer a means for capacity building, together with the SESAR programme for the
technological part. Introducing a focus on all aspects of ATM performance, the
SESII package was launched in 2009, establishing the Network Manager function.
Still, so far the single European airspace has not become a reality, and the
SES is not delivering sufficiently. Challenges such as delays and flight
inefficiencies remain. The functional airspace blocks (FABs) are late, and
National Supervisory Authorities are struggling. This is why proposals for a
SESII+ are presented: "to accelerate the implementation of the Single Sky,
complement some initiatives which are not yet complete and strengthen the existing
legislation."
·       
Bernard
Gustin,
CEO, Brussels Airlines
The aviation
sector represents an important business sector, millions of jobs and makes up a
high percentage of GDP. Comparing the profitability of EU air transport with
the rest of the world, there is no sign of mismanagement, but rather a
structural issue. Cost reduction objectives have been set by the European
Commission and SES is the solution: we have to go there as soon as possible,
including competitive infrastructure, coherent growth supporting EU aviation
policy and a global solution for ETS. The reason for the slow progress is
clear: the lack of Member State commitment costs millions of Euros a day and,
thus, hampers economic recovery. SESII+ should focus on strengthening the
economic regulation at EU level, define penalties in case of non-compliance,
promote liberalisation and the unbundling of ancillary Air Traffic Management
(ATM) services, and more airspace user involvement, without administrative
burdens.
·       
Claude-France
Arnould,
Chief Executive, European Defence Agency (EDA)
SESII+ will
have consequences for the defence actors, not only in terms of costs but also
in view of decreased budgets for the sector while the requirements remain
similar. The EDA is not only a user of the airspace but offers services as
well. There is an industry that has both civil and military activities and it
contributes to economic growth, jobs and innovation. It is important that the
military is included in the regulations and the technologies of the airspace so
they can have trainings and operations. It is a fact that routes can be slowed
down because of military activities and there is also a wish to use time and
fuel in a more economical way. A flexible airspace, more speed and less
consumption is a shared concern of civil and military actors. Finally, it is
crucial that costs are evaluated and a coherent vision of civil-military
cooperation is elaborated. 
First Panel on performance
General
picture; FABs; unbundling; customer focus and role of users
·       
Jacek
Krawczyk, Vice-President
EESC
The EESC is
interested in maintaining a dialogue within the sector, including the social
dialogue. The SES project has lasted for quite some time already, and now it's
time for a decision on its implementation.
·       
Matthew
Baldwin,
Director Aviation Policy, European Commission
Performance
is absolutely the raison d'être of the SES. When listening to both sides during
the debate (airlines, Air Navigation Service Providers (ANSPs)), it seems that
they are dragging each other apart, while a workable way to deliver performance
in the system needs to be found. With the performance scheme, the Commission
already came up with a compromise formula that aims to empower business and
Member States to work together and determine the targets of that efficiency
drive. It is now the time to find a balance between reality and ambition, and
to make the necessary changes. FABs have always been central to the SES and the
Commission will continue to push their development. Some Member States will go
through an infringement process later this year. It is important to evaluate
all the functions that are currently performed in FABs. If a way to make
ancillary services more independent can be found, it would possible to attract
knowhow from elsewhere, benefiting from more rationally organized and
specialized subcontractors. The customer focus must be back to the heart of
ATM: the industry should have a bigger role in the work of the Network Manager,
and the airspace user groups should have a role in the governance of ANSPs. 
·       
Massimo
Garbini,
CEO, ENAV (Italian Air Navigation Service Provider)
The
modernization of the EU ATM is crucial for its economy. The separation between
regulation and service provision should be reinforced. FABs are a heterogeneous
reality and should be flexible, keeping into consideration Member State
agreement and a strong role for ANSPs. The centralized functions should be
fully implemented, ranging from a reinforced role of the Network Manager to the
establishment of a Deployment Manager by 2014 and the extension of the SESAR
Joint Undertaking beyond 2016. The performance scheme must come with a robust
and continuous improvement mechanism. Furthermore, it is necessary that
specific infrastructural and operational centralized services with new economic
and governance models are identified. Of course, an effective funding and
financing model is indispensable, as is a streamlined institutional and
regulatory framework. Overlaps, gaps and conflicts should be avoided, while
centralised regulatory functions should go hand in hand with efficient resource
use.
·       
David
O'Brien,
Director Flight and Ground Operations, Ryanair
FABs are a
great idea, but so far they have been hijacked. They should be open to tender
at regular intervals. It is a concern that some ANSPs are getting ahead of the
game to create what are called FABs but in fact are monopolies that are
becoming cartels. As far as the economic regulation of ANSPs at national level
is concerned, it seems to suggest that ANSPs should never ever fail. The UK has
an administration that allows the transfer of the operation, the equipment, the
staffing, to the state in the case of economic collapse of the supplier. This
should be brought forward by the Commission. The inability to fail comes from
the view that the service is essential. How can it be if a service is essential
that many flights are cancelled by air traffic control actions? Ryanair is
therefore in favour of a ban on strikes. One proposed solution for the strike
problem is that there would be notice. But that does not really help: the ANSPs
suffer the loss, just like the airlines do. The Commission should put a cap on
the license fee that the state might impose. 
·       
Luc
Laveyne,
ACI Europe
The fourth
pillar of the SES is airport capacity. The whole concept will never be
successful if ground and air capacity objectives are not streamlined. Even with
the best use of existing capacity, certain bottlenecks in the network cannot be
solved without additional ground and runway capacity. SES and SESAR can help
maximising the effect of existing ground capacity. SESAR deployment should be
led by those who bear the risk of investing. It is important that a better use
of capacity on the ground happens by optimizing processes, with the involvement
of all airlines, and by connecting airport and network operations plans. The
most efficient way to handle ground processes is to install some kind of
airport capacity coordinator. It is important to focus on the turnaround
process and inbound information. 
·       
Riccardo
Rubini,
President ATM Committee, ETF
The rhetoric
of SES implementation and the related unrealistic expectations are based on
political targets more than on needs and possibilities. The European Commission
has always tried to introduce competition, liberalization and market principles
without considering the negative effects on the workers. The comparison between
the EU and the US systems is unfair: they have a different social, political
and economic history with the main difference being the funding system (in the
US by the US treasury). ETF is also against the Commission's plans of different
rules for ancillary services: it will create new fragmentation and will
jeopardize the number and the quality of jobs. The human dimension in the SES
is missing and should be introduced in the legislation, such as training,
mobility issues, social effects, social dialogue, safeguards for jobs and their
quality. The dissatisfaction concerning FABs comes from unrealistic
expectations. A unique model for FABs based on the consolidation of service
provisions, reduction of the number of national providers, reduction of the
number of jobs etc. is not acceptable for the ETF. The ETF calls for a target
setting process that is realistic and does not affect collective agreements and
social conditions, as well as the number and quality of jobs and working
conditions. Top priority should be safety and operational performance, rather
than cost reduction. 
·       
Moderator:
Jacek Krawczyk
The world is
not one-dimensional: who shoots should be prepared for the ricochet. The
passengers want the whole value chain to perform well, and one party must not
keep the others 'hostage' for whatever reason. The EESC is a house of
discussion, not of threatening. If the goal is to not make a change, that is
not the right approach.
Second Panel on the Institutional Set-up
The
role of Member States and resources for National Supervisory Authorities
(NSAs); 'triangle reorganisation - Commission – EASA - Eurocontrol
·       
Moderator
Maria-Jean Marinescu: 
FABs are
actually not necessary; an SES could be established in 6 months with the
political will and the technical means. 
·       
Margus
Rahuoja,
Cabinet Member of the  Commission Vice-President Kallas
There are a
certain things to do in 2013 concerning the institutional set up: how to deploy
SESAR, the role of the deployment manager, decide whether the work can be done
under the exiting convention or if there should be an upgrade, whether the
community method is valid for achieving the SES, etc. The Commission cannot take
the lead because it can only regulate and facilitate. It should be the whole
community taking the responsibility now. The community way seems to be the only
way forward for the SES; it is now about how to define it and where to put the
emphasis.
·       
Dirk
Nitschke,
Director Air Navigation Services Division, German Federal Ministry of
Transport, Building and Urban Development
It is
important to try to understand the views, constraints as well as the
possibilities of the other SES partners in order to come up with realistic
goals. Concerning cost efficiency, it is important to look at the reduction of
air navigation user charges but also at the total cost for everybody involved.
With the way forward as defined by Commissioner Kallas in Limassol last
October, there are doubts if any goal will be achieved. For example, many
Member State representatives will be very alerted towards any proposal, as it
could become a legal basis for infringement procedures against them. Concerning
the ANSPs, it is important to note that these do not always have the necessary
tools to reduce costs because they have to deliver services at any time. FABs
have been implemented on a legal basis, after enormous efforts. Moreover, there
are concerns from the ATM world about EASA's involvement in the technical
parts, i.e. not just in the safety related parts. Finally, the Commission
should also be encouraged to make a maximum use of Eurocontrol for its
expertise and appreciation from non-EU Member States and the military
colleagues.
·       
Patrick
Goudou,
Executive Director, European Aviation Safety Agency (EASA)
Concerning
the role of EASA on non-safety issues, it has always been difficult to make a
clear distinction between safety and non-safety in technical matters. The only
solution was to give all technical matters to one body. Of course, EASA will
rely on Eurocontrol for expertise as well. The regulatory framework on ATM is
currently not consistent because of overlaps. Furthermore, the roles of the
different bodies are unclear; there is a need to allocate tasks clearly which
means that Eurocontrol will focus on the operational tasks and EASA on the
regulatory tasks. A clear structure involving all actors should be designed,
describing the role of each of them without gaps and overlaps. The community
method will remain the strongest one in the future. EASA should be able to help
the NSAs for example with staffing problems. To make savings, the resources
should be allocated to all actors in accordance with the task they perform, as
to decrease the costs. 
·       
Patrick
Vanheyste,
Director, Belgian National Supervisory Authority (NSA)
There are a
lot of overlaps between the institutions (Commission, EASA, Eurocontrol and
FABEC, which is the Central-European FAB) which makes the job more difficult.
We also need to raise the budget and the number of staff because we are
embedded in a national structure. Making thorough assessments of the impact of
new regulations regarding HR, training, budget is important. Concerning the
training of staff, we need a form of standardized training. Furthermore, there
should be more flexibility in the regulations concerning the number of experts
vis-à-vis the size of the NSA. Developing a common understanding of how exactly
to interpret the regulations among NSAs can take a lot of time. Administrative
burdens are sometimes too heavy (questionnaires, reports…) to resolve the human
resources related problems, NSAs could cooperate, for example via the NSA
cooperation platform that could be formalized. To successfully implement the SES
requires strong and independent NSAs, cooperation between them and the
necessary time for them to adapt to new situations and rules.
·       
Patrick
Ky,
Executive Director, SESAR Joint Undertaking
There has to
be a virtuous performance framework in SESII+, despite the long investments
cycles and the multitude of factors that influence the success and benefits.
One of the main fears is that the performance framework would push cost
efficiency targets, resulting in a reflex to focus on short term benefits only.
Therefore, the performance framework should ensure medium to long term
investments. Some financial schemes should be implemented to incentivise the
development of new technologies. In order to avoid inconsistencies and, thus,
costs, it is also important to move towards a total system approach. There is
no need to be dogmatic about centralized and ancillary services. Ancillary
services are already to a certain extent operated by private companies, but at
a national level. There should be a possibility to do this at a wider level too
without the national level hindering this. 
Conclusions
·       
Krzystof
Kapis,
Director Aviation, Polish Ministry of Transport
Looking back
at the previous meetings in Warsaw (2011) and Limassol (2012), the approach of
the Commission has shifted, which means that some time has been lost. The main
question remains where we are now with the implementation of the SES II
package. Problems need to be identified and solved, even if that means that
additional regulations are adopted through an SES II+, keeping in mind that
there needs to be a balance between regulation and action. Every element of the
system should be exactly defined in light of the total system approach: no
overlaps, no duplication.
·       
Matthias
Ruete,
Director-General for Mobility and Transport, European Commission
It is
important to distinguish between the actions that still need to be done to
ensure that the SES objectives are implemented, and the decision about the
levels on which these actions are needed. The cost of service provision needs
to be under control. Has the performance scheme as it was conceived delivered
or does it need to be strengthened? Business models need to change, but how can
these changes happen? FABs need to become performance driven, the Network Manager
needs to be strengthened, and the ways to modernize ANSPs should be examined to
deliver the full potential. 
The capacity
crunch will come, and if it is unprepared this will lead to a very
difficult situation. One of the answers will be technology: deployment of
SESAR, etc. There will also be questions of environmental impact to deal with,
and technology and SESAR will be a solution. Furthermore, dealing with safety
can be done in a smarter way, balancing measures with costs. Concerning the
institutional framework, we will never have a 'European FAA', but there will be
at least three bodies at the European level dealing with aviation: EASA,
Eurocontrol and the Commission. Overlaps, redundancies, duplications and
contradictions should be deleted.
ANNEX V
Assessment of options
Contents
1          Introduction. 114
2............. Integrated
structure and support services 116
3............. Focusing
ANSPs on customer needs 125
4............. Ineffective
role of NSAs 134
5............. Performance
scheme governance mechanism.. 143
6............. Refocusing
of FABs 153
7............. Role
of the network manager 163
8............. Impact
of scenarios on employment 171
ASSESSMENT OF IMPACTS

1          
Introduction 

This
Annex backs up the assessment of impacts in chapter 5 and 6 of the main report
with methodological explanations and additional evidence. 
Given
the strong focus on cost-efficiency, the main impacts of this initiative are
economic. The assessment will focus on impacts of the proposed options on:
·       
cost
efficiency
Is linked to the direct cost of service provision, which is charged to the
users mainly in route charges. Some other charges are often used as well, such
as charging for meteorological services, charges for aeronautical information
publications, terminal charges etc. However route charges are the biggest group
and reflect directly the cost-efficiency of the core ATM services and are hence
commonly used as an indicator. Service provision has traditionally been
organised on a user-pays principle and in fact until the performance scheme was
introduced, European ANSP's operated in a full cost recovery environment where
all costs could be charged to users, without explicit limits. The performance
scheme changes this by setting target prices/costs that effectively cap the
charges.
·       
flight
efficiency
is divided into horizontal and vertical flight efficiency. Traditionally
horizontal flight efficiency has been more in focus, but attention is nowadays
turning also to vertical flight efficiency. Horizontal flight efficiency
essentially seeks to use the most fuel efficient route between departure and
destination airports. Most of the time this is the great circle route, which is
the shortest distance between two points on a globe. Sometimes weather
phenomena (wind, thunderstorms…) make a longer route preferable, but for
purposes of the relatively short intra-European flights and ATM performance
measuring the geographically shortest route is used. On the other hand vertical
flight efficiency considers the optimal profile for the aircraft to climb to
its optimal cruising altitude, and the most fuel efficient descent profile back
from that cruising altitude to the destination runway. A third element is to
minimise the changes in altitude once the aircraft is at cruise, in order to
avoid the fuel burn associated with these extra climbs. Generally speaking the
most efficient profile is one of maximum power climb directly to the route and
again a gliding descent with engines idling back down. However this is often
difficult due to other traffic, departure or arrival procedures/routes or poorly
sequenced traffic flows etc.
·       
capacity/delays ATM capacity
may be constrained through many factors, such as runway congestion, congestion
in en-route sectors[134],
technological problems or overall technology or staffing levels that don't
correspond to the traffic levels. Good planning of investments in the long run
and traffic flows on the short run can help resolve capacity issues and reduce
delays. However all capacity measures come at a price, so that cost of
investment has to be balanced against the users valuation of the cost of delays
and consequently the optimal delay level is higher than zero.
·       
administration
costs
– includes any additional cost burden to the industry or authorities, generated
by the introduction
of policy options. For example, it has been taken into account both the costs
that have to be met by different bodies, operators and public authorities when
making changes in management and governance structures, preparing tenders and
any other significant compliance and enforcement costs[135]
·       
budgetary
costs – impacts
on national or EU budget. 
In
addition to economic impacts, the policy options would bring along also certain
social impacts in terms of changes in employment levels and working conditions.
These impacts are interdependent between the various options chosen and also on
external factors. Therefore an assessment of the employment impact has been
performed based on the scenarios described in chapter 6. For more detail on the
impact and groups of employees affected, see chapter 8 of this Annex.
As
regards safety, the initiative aims to be 'safety neutral, i.e. any measures
should not alter existing safety levels. The environmental impacts in terms of
emissions and noise are indirect and driven by gains in flight path
efficiencies.
The
impacts are quantified wherever possible, using ranges of estimates (rather
than discrete values) where relevant. However, a number of options concern
aspects such as administrative or governance efficiency, where all elements of
changes cannot be quantified, or where they are essentially enablers for policy
domain. In addition the precise impact of e.g. improved performance target
setting depends on a variety of external factors – in particular the
negotiating and bargaining skills of various participants.
The
assessment is based on:
·       
Interviews
with key stakeholders
·       
The
electronic  survey among stakeholders carried out by the Commission
·       
Literature
review
·       
PRB
monitoring results, studies and discussions with PRB on specific issues.
·       
A
dedicated consultant's study on SES II[136]+ including  E3ME
macro-economic model.
·       
 (as
illustrated on Figure V-1 below).
Figure V-1: Analytical framework for E3ME model
The e3ME
model used by the consultant is a European economic, energy and environment
model, where relationships are estimated from historical data. The structure is
based on the system of national accounts as defined by ESA95 (EU Commission,
1996), with further linkages to energy and materials demands and environmental
emissions. The labour market is also covered with estimated sets of equations
for labour demand, supply, wages and working ours. In total there are 33 sets
of econometrically estimated equations, including components of GDP
(consumption, investment and international trade), prices, energy demand and
materials demand. The historical database used covers the period 1970-2010 and
the main data sources are Eurostat, DG ECFINs AMECO database and the IEA,
supplemented by OECDs STAN database and various other sources as appropriate.
The analysis also includes indicators, which were included in the McKinsey
study on the macro-economic impact of SESAR (June 2011).

2          
Integrated structure and support services

Option
1.1 – Do nothing.
Description: This option
is to retain the existing arrangements, allowing the various ANS to be bundled
into a single service provider, which can then be designated without
application of normal public procurement rules. 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. 
The
following pro's and con's have been determined:
Pros
·       
No
changes in the set up for ANSPs and politically palatable to States.
·       
Avoids
possible dislocation associated with unbundling. 
·       
Avoids
any cost of change beyond the baseline developments.
Cons
·       
The
cost-effectiveness and transparency of service provision are not improved.
·       
Requires
increased internal management effort if improvements are to be expected.
·       
Perpetuate
the current problems.
Whilst
legally this option does not preclude the possibility of unbundling, at
present, there are no signs that the e.g. performance scheme would be causing
ANSPs to re-think the management of support services. Such a move would create
a risk of social unrest and the financial benefits would flow mainly to the
airspace users and not the ANSPs. In the consultation the staff representatives
were particularly opposed to mandatory unbundling as they do not believe the
Commission should dictate the most effective ownership structures to support
SES. They were also concerned that mandatory unbundling in a safety critical
area is contradictory to safety as it increases the number of interfaces and
thereby business, organisational and technical complexity; which must then be
mitigated from a safety perspective. 
There
are also concerns with some militaries over potential foreign ownership of
service providers, which demotivates States from even considering the move even
if there are mechanisms to provide safeguards to security. This has been proven
by the UK Ministry of Defence, which - under cost pressures - is looking to
outsource maintenance and support services to all UK military aerodromes. On
the other hand, many airspace users support moves to open up these services to
market competition[137][138]. There is
also evidence from smaller civil ANSPs that outsourcing of support services
could be a preferred option to achieve economies, including matching services
and service levels to operating hours, but these views are unlikely to
influence the major bundled operators. 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 are best managed.  Hence the baseline inefficiencies can be expected
to continue unchanged.
Option 1.2 –
Functional separation of support services
Description: 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.
The
study has identified the following pros and cons for this option:
Pros
·       
Relatively
simple to set up for ANSPs and politically palatable to States.
·       
Creates
more focus on cost of services and transparency on technical support costs.
·       
Avoids
possible dislocation associated with unbundling. 
·       
Uses
cost transparency, benchmarking and a capacity for the operations arm to ask
for external quotes to drive performance from the technology provider.
Cons
·       
The
cost effectiveness of the option are linked to trade-offs between the scope and
scale of the functionally separated business unit. The larger the scale and
scope the more practical and effective will be the creation of a separate
business.
·       
Requires
additional dimension in financial reporting and performance monitoring systems.
·       
Requires
commercial and market oriented, rather than political management approach in ANSPs.
Risks
·       
May
lead to current situation being perpetuated with just additional cost being
added in the form of new management layers.
·       
Moderate
risk of strikes and disruptions to traffic.
Economic
impacts
Cost
efficiency: Overall this is unlikely to quickly change costs and there
even is a risk that it will marginally increase costs charged to users,
particularly in smaller ANSPs where new management layer would need to be
created and currently multi-tasking staff would need to be duplicated or at
least their work measured in two business units. Nevertheless, over time greater
clarity over expenditure on support services should help identify opportunities
to reduce costs of service.
Flight
Efficiency: This option is focused on cost efficiency and will not
affect flight efficiency.
Capacity: No impact is
likely, assuming that quality of support services are not eroded leading to
more frequent technical failures.
Administration
costs: Whilst
the business plans already today need to differentiate between the different
services, under this option ANSPs would be required to provide separate
accounting and business units for these services. It is expected that the
creation of new business units within ANSPs will result in the increase of
overhead staff costs within the ANSP. It is possible that some new staff would
need to be recruited to manage the new business units.  Budgetary costs: changes
to the procurement of support services from third parties or the necessity to
apply the separate accounting rule by the ANSPs will not have an impact on the
national nor the European budgets. 
Social
impacts
Employment
and working conditions: Likely to have minimal impacts on staff as they
remain in the same organisation. On short term only minimal change in
employment is expected, but on longer term – if the new management introduces
efficiency measures – some redundancies could be encountered. These will
however be in most cases overshadowed by the changes caused by the technology
changes under SESAR project and most likely offset by similarly marginal
employment increases in the airlines and the wider economy
Safety: No impact
foreseen as the services themselves remain unchanged and are run by the same
people. Already today strict EU rules apply on the use of safety management
systems and responsible managers and these rules would continue to apply
regardless of the format of the ANSP's. Also oversight is ensured as today so
that the national NSA oversees the ANSP's and EASA oversees the NSAs.
Environmental
impacts
There
are no direct environmental impacts linked to this policy option.
Option 1.3 –
Structural separation of support services
Description: 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. Subsequently, 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. This makes the support
services subject to European public procurement rules. 
The
study has assessed the following pros and cons for this option:
Pros
·       
Creates
maximal focus on cost of services and transparency on technical support costs
as services are tendered through an open process. This should lead to lower
charges.
·       
Enables
a true market situation to be created, with the associated efficiencies. 
·       
Eases
the arrival of new entrants also from outside aviation, thus promoting
technical development and improving quality. New concepts e.g. in meteorology
could result in reductions in delays and emissions.
·       
The
option would ease search for synergies at the level of FABs as support services
could be shared more easily.
·       
Consistent
with 2008 High Level Group endorsed approach to “Facilitate the application of
market principles, unbundling and liberalisation of ANSP services.”
Cons
·       
More
complex to set up than other options as this requires the creation of new
entities.
·       
Major
political opposition would rise in certain States
·       
Unbundling
is not supported by trade unions. The European Transport workers Federation
(ETF) has outlined its position as “... the application of market principles to
ATM. If it has to be apply anyway, a regulatory control has to be implemented.
There is a high risk that natural monopoly services rules under market laws
will give priority to retribution of shareholders rather than operational
performance of the service.”
·       
The
cost effectiveness of the option is linked to the creation of new entrants in
the market.
·       
Requires
oversight to ensure a true market exists, as the performance scheme does not
apply to market-based services, but the targets apply only to those ANSP's
operating outside the market mechanisms.
·       
Requires
the different culture – commercial and competitive not political – and
effective commercial organisational leadership to manage the process.
·       
Requires
additional effort on contracting organisations to manage the outsourcing
contracts
·       
Possible
complexity in provision of services and ownership of infrastructure where they
have been shared between the core and support services.
Risks
·       
Involves
a considerable risk of strikes and associated disruptions to traffic
·       
Need
to ensure continuity and quality of outsourced services
·       
ANSPs
may lack know-how of procurement and establishing service contracts for
outsourced 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 different than and
independent from the core ATC service provider.  Subsequently, the possibility
for Member States to designate these support service providers is abolished. It
becomes mandatory that support services become subject to European public
procurement rules.
Overview
of the experience in the sector and other industries
MET
and AIS services were the two most contentious issues in the Reference period 2
consultation responses[139]. They are
both well-defined at ICAO level so further service definition for outsourcing
should not be a complex matter. There are also both public and private
organizations that would be capable of contracting to provide the service at a national
or even pan-European level as well as considerable experience of such changes
in practise; 
·       
The
European AIS database (EAD) run by Eurocontrol is a good example of a
pan-European service, combining both public and private service provision
characteristics.  
·       
In
2005 the FAA has outsourced its Automated Flight Service Station (AFSS)
programme to Lockheed Martin, based on estimated savings of $2.2B over 10 years[140]. 
·       
The
FAA is currently exploring a new outsourcing arrangement for its Direct User
Access Terminal Service (DUATS)[141], a weather
and flight planning service for pilots.
Controller
training is also already often outsourced so the principle of establishing a
structural separation of ANSPs’ training centres is clearly feasible. Examples
of commercial training providers in Europe include Entry Point North, ATS
Global, DFS, NATS and Czech ANS. Since the implementation of Directive 2006/23,
which harmonised controller licenses in the EU, there should be relatively[142] free
movement of controllers within Europe, lending further support to the concept
of outsourced training. 
As
compared to controller training, aeronautical information and meteorological
services, the CNS services have a more immediate impact safety and service
quality, for example loss of any of the services can result in the need to
increase the separation distances or times between aircraft being controlled to
ensure collisisons are avoided, or to apply sector closures (resulting in
delays, route lengthening or cancellation) so any unbundling will require clear
service specification. However a number of manufacturers already provide
operational maintenance of the systems so they should be capable of contracting
for the total service as well. There is no reason, provided that issues of
ensuring systems safety and service continuity can be addressed, why the
service could not be provided by a non-ATM specific supplier; indeed the
Airlines consider that this might result in significant advantages. There are
also established models available in other sectors (notably rail) for
establishing contractual, performance and regulatory oversight to manage safety
and service continuity issues. Whilst outsourcing of meteorological services is
already the norm, there are also a significant number of examples of outsourced
CNS services world-wide. In Europe there are two notable examples:
·       
The
Highlands and Islands Airports (HIAL) Ltd
·       
LFV-Eltel
outsourcing.
Experiences
of unbundling ATM support services
HIAL
manages 11 airports in the north of Scotland. It outsources its aerodrome
engineering, requiring a small number of engineers supporting 24x7 operations
in shifts. The engineers are contracted through the UK NATS as a service. HIAL
owns the CNS equipment, but is also considering the potential benefits of
satellite navigation, which would do away with the need to own infrastructure.
Overall HIAL’s experience of outsourced Air Traffic Engineering services is
positive but it also emphasized the importance of well-defined service
contracts and the need to manage risks. Outside of ATS their experience of
outsourcing is that they have been able to achieve lower costs and meet their
defined levels of service (e.g. finding the spread of offers to be ~25% between
the lowest and highest offers). A general issue is the need to have staff with
sufficient expertise in procurement.
The
Swedish ANSP; LFV, outsources systems maintenance of CNS equipment to Eltel Ltd
since 36 years. According to PRU cost efficiency benchmarking data (ACE 2010),
LFV’s technical support staff is approximately 9% of total staff, compared to
~22% for Europe on average. LFV’s experience with this outsourcing has been
good. The benefits are improved cost efficiency and a high quality of service.
LFV made an assessment for this study of “Maintenance Cost Effectiveness” and
based on that, outsourcing to ELTEL is estimated to be about 50% less expensive
than in-house provision. It was felt that in-house services do not always
achieve the business-like services of outsourced arrangement. A key requirement
for LFV is to keep ownership of the infrastructure in LFV, so that only
maintenance is out-sourced. Other lessons of outsourcing are the importance of
maintaining sufficient competence in the organisation to do the outsourcing and
that it takes time to develop good service level agreements, which are
essential to the success of outsourcing. The experience with CNS would lead LFV
to consider further outsourcing arrangements. For example LFV is currently
bound to use the national MET provider as the designated service provider, but
EU rules already allow for forgoing designation of MET for the benefit of
competition. Already today LFV outsources basic training to Entry Point North,
previously their internal training provider and is considering full competition
in the future. Outsourcing is not used for non-technical functions such as
payroll, HR etc.
Experiences
of unbundling in other sectors
Network
industries share many common characteristics[143]. On
the one hand, the infrastructure segment displays features of natural monopoly
and is subject to regulation on pricing and access to the network. On the other
hand, market principles may be ensured in network services, as long as each
operator gets a fair and transparent access to the infrastructure. Experience
in other markets, that were opened up, has shown improvements in the level of
quality and availability of services. In some rail markets the passenger
satisfaction rose while the number of passengers increased in some cases
approximately 50% over 10 years period. In some cases, tendering of public
service contracts has shown savings of 20-30% for a given level of service
which can be re-invested to improve services[144].
Liberalisation
of European Railways[145]
The
development of a competitive market structure was vital for the supply of
public transport services. Since railway market liberalisation, the
following benefits were observed in various EU Member States: 
·      the
Netherlands gained 20–50% through competitive tendering efficiencies, 
·      Germany
observed 28% increase in train kilometres, 26% reduction in subsidy paid, 43%
increase in passengers, 500 kilometres of re-opened lines and 300 re-opened and
new stations, 
·      Sweden
reduced its subsidies by 20–30% through tendering and increased the customer
satisfaction. 
In the Recent
Impact assessment on the 4th railway Package, an estimate of further
operational efficiency improvement from compulsory competitive tendering of 15%
was applied[146].
Market
opening in the telecom sector[147] 
Regulation
(EC) No 2887/2000 of 18 December 2000 provided for an unbundled access to the
local loop. The unbundling led to increased competition and stimulated
technological innovation on the local access market, resulted in the decreased
charges for telecom users, as well as encouraged the provision of a large range
of competitive electronic communications services.
Liberalisation
in the energy sector[148] 
The
Second energy Package of 2003 introduced limited unbundling provisions. The
Commission’s Energy Sector Inquiry, launched in June 2005, identified a number
of areas that needed improvements; inadequate separation of network and supply
companies in particular. The Commission proposed the Third Energy Package
(2007), addressing this issue as well as proposing the option of an independent
system operator (ISO) which envisages energy companies retaining ownership of
their transmission networks, but the transmission subsidiaries would be legally
independent joint stock companies operating under their own brand name and with
a number of very strict structural safeguards ensuring the autonomy of the ITO
from the holding company. 
Economic
impacts
Cost
efficiency: From discussions held in the course of this study, it is
likely that even assuming a very conservative figure[149] structural
separation can eventually lead to cost savings of at least 20% on the costs of
support service provision per year through market pressures. This would amount
to some € 450 million
in cost savings per annum[150], which is
around 5.4% of the total € 8.3 billion annual ANS costs in 2011.  In
the case of MET services the cost savings could be much more, but require
States to agree on removing the implicit subsidy that aviation provides to
national MET providers[151]. Further structural
separation of training services may also promote more of a market in these
services and lead to lower overall costs and potentially some consolidation of
training facilities in Europe, further reducing costs. The training
establishments will need to be capable of providing a sufficient flow of
graduates to support European ANSP demands to avoid staff shortages which would
cause longer term threats to system capacity.
Structural
separation of CNS offers the potential for this service to be delivered on an supra-national
basis which in turn could promote reduction of sites and greater efficiency in
the operation and maintenance, including savings accruing from reduction the
range of equipment employed in the form of smaller spares inventories and
reduced ATSEP training requirements.
Flight
Efficiency: This option is focused on cost efficiency and will not
affect flight efficiency.
Capacity: No impact is
likely, assuming that quality of support services are not eroded leading to
more frequent technical failures. 
Administration
costs:
ANSPs
Most
of the ANSPs in Europe have been managing and providing their core services
together with the support services. For many of them it requires considerable
effort to separate the services due to their interdependency and importance for
other services. For example weather observation may be done by the air traffic
controllers and relayed then to the MET provider without separating the cost in
accounts. However, several ANSPs in Europe have started outsourcing some of
their services to external companies. In some cases these practices started
many years ago (Sweden in CNS, most States in MET) while more recently their
slow emergence at other ANSPs can also be observed throughout the Europe. A
legal requirement to subject all support services to public procurement rules
would force the ANSPs to define detailed specifications for services, the
conditions for their provision, and the rules for non-compliance or
non-performance, etc. Since most ANSPs lack experience required for managing
the outsourcing, they would need to hire additional staff specialised in
procurement. It is expected that the ANSPs would need some time to prepare
their operations as well as to change the current mentality and approach of the
existing staff. It is expected that on average, each ANSP would have to hire at
least 1 additional procurement expert. The average European costs of staff at
ANSPs are approximately € 162 000 a year[152].
Therefore,
as a result of this option, the administration costs are expected to increase
by € 4.5 million per year. 
NSAs
Under
this option, the NSAs will need to check and to certify the new service
providers. Therefore, the NSAs will need additional resources to accommodate
these new tasks, but considering the limited number of these providers and the
fact that their management systems and other means of compliance have already
been checked when they were part of the core provider, the net extra burden
associated with this task will be limited compared to the current situation. An
input from the NSAs will however be required, especially at the beginning of
the implementation process. The NSAs will need to develop internal procedures
for assessment of the new support service providers. There is also a
possibility that the same companies might become the service providers in
numerous countries at the same time in which case certification cost will only
happen once and oversight will be shared by several NSAs, thus reducing
oversight costs.
Social
impacts
Employment
and working conditions: A reduction in staff or changes to working
practices as a result of downward pressure on costs is likely in this option.
This implies changes to employee conditions and lower job quality. As with the
performance target options, this will most likely affect engineering and
administrative support staff. However the effect of technology change in the
field will most likely be much larger than the one caused by unbundling as the
service itself will undergo fundamental changes through the disbandment of
ground-based infrastructure and move towards increasingly automated weather
observation and data processing techniques.
There
are likely to be redundancies in ANSPs as the efficiency of service provision
increases. However the support study show that the expected levels of cost
improvements in support services would enable further growth in airlines and
the wider economy, to the extent of 2000 additional jobs until 2030, which is
expected to cover the negative employment impact in support services.
Whilst
a full comparison with past experiences is difficult, the employment impact in
ATM companies that have gone from public sector to privatised service provision
may give an indication of the direction and magnitude of change. NavCanada has
operated a private enterprise since 1996 and during that time its overall staff
numbers have reduced from 6400 in 1996 to slightly below 5000 in 2013. However
at the same time the number of air traffic controllers has risen by over 200 to
cope with a 50%[153] increase in
traffic during that period. This exemplifies well the potential impact on
support services. As regards the UK NATS a comparison of PRC ACE-report[154] figures show
total NATS staff to be 4882 in 2002, going up to 4932 in 2005 and then down to
4541 in 2010. This is a 7% reduction in 2002-2010 and about 10% reduction in
the last 5 years. In contrast the Swiss Skyguide has seen an increase between
2002 and 2010 from 1151 to 1308 in staff, which is some 13% in 7 years. During
the same years overall employment declined by about 5% in the 27 EU ANSP's.
This shows that benefits have been reached with very different impacts on staff
and sometimes it has been enough to slow down staff growth in face of growing
traffic to achieve efficiencies. Based on these figures it could be assumed
that on average reductions would remain at a maximum of 10% over 10 years, with
an emphasis on support services.
Safety: No impact on
safety is expected from unbundling. The technical requirements set by law, as
also the oversight system relying on NSAs and EASA will stay the same. Some
minor disruptions of service are possible where the fundamental mechanism or
technology of service provision changes, but the current requirements on
management systems are expected to be sufficient for covering these changes
safely. 
Environmental
impacts
There
are no direct environmental impacts linked to this policy option.

3          
Focusing ANSPs on customer needs

Option
2.1 – Do nothing.
Description: In this
option the ANSPs would continue to operate the current consultation
arrangements. Whilst these were an improvement over the re-SES arrangements,
they are limited to certain airspace configuration and performance scheme change
situations.
Identified
pro's and con's at a glance:
Pros
·       
Creates
no additional cost or bureaucracy
·       
The
current arrangements could be exploited more efficiently if pushed by soft
measures such as education.
Cons
·       
No
additional involvement of airspace users
·       
Consultation
continues to be a one-way street.
Risks
·       
Involves
a risk of worsening situation as the performance scheme becomes more central
and if organisational unbundling is chosen as they give the ANSPs more freedom
to operate.
The
"do nothing" option would mean a continuation of the current
variation of consultation arrangements. The regulations already require a
certain amount of stakeholder consultation[155], but a
recurring complaint of the airspace users is that its quantity and quality vary
greatly from State to State. It should also be noted that the current
requirement is primarily focused on the Member States and less on the ANSPs to
engage in consultation, although the vast majority of operational decisions
affecting stakeholders is done by the ANSP. Where consultation with ANSPs
exists, this is also often seen as a one-way street with limited possibility
for airspace users to take the initiative and come up with proposals. Together
with the increasingly central role of the performance scheme and the
overwhelmingly strong bargaining position of the ANSPs in that process, this
creates the danger that the airspace users – for whom the ATM system exists –
are gradually side-lined from the main decisions. 
It
should also be noted that consultation is not a shortcut to happiness by any
means. The UK NATS is generally considered an ANSP, with an exceptionally
wide-reaching consultation and airspace user involvement arrangements, yet it
is still one of the most expensive ANSPs[156] in Europe,
based on per service unit cost. It is clear that many other things – traffic
density, traffic complexity, investment cycle, management decisions, pay levels
etc. – which are not manageable through consultation, also affect the end
price. However stakeholder involvement remains an important communication
channel about customer requirements and a means of steering ANSP priorities
within those external constraints.
Option
2.2 – Improved consultation and sign-off of some investment plans by airspace
users.
Description: This option
seeks to improve the consultation between the ANSPs and airspace users by
including a mechanism for airspace users to sign-off ANSP investment plans. The
system has two major aspects to it; (a) a partnership model, and (b) airspace
users approval for investment plans.
Identified
pro's and con's at a glance:
Pros
·       
Partnership
model
o       Greater
clarity on process and procedures.
o       Greater
motivation for ANSPs to improve performance.
o       Better mutual
understanding of business and operational challenges on both sides is likely to
lead to better solutions/ investment decisions.
·       
Airspace
user approval of investment plans
o       Optimise
alignment between airspace users and ANSPs.
o       Expose
investment plans and the assumptions underlying these to scrutiny by those who
ultimately pay for those investments.
o       Align
investments with user needs – to the extent this is possible given the
diversity of users.
o       Better
alignment of priorities and timing of investment.
o       More reactive
to down-turns in traffic.
o       Services of
little or nominal value could be discontinued or replaced by services more
appropriate to user needs. 
Cons
·       
Partnership
model
o       Success of
partnership approaches is based on attitude, trust, respect and understanding,
which is not something that can be legislated. The real effectiveness of a
partnership approach is dependent on attitude. 
o       It is time
and resource consuming for both ANSPs and airspace users to engage in more
consultation. 
o       It is
possible that the airlines (and certainly Military and General Aviation) do not
want to approve the investment required for SESAR i.e. the customer priority
(after safety) is cost and thinking is short term. This may create some issues
if a local focus is taken instead of a broader network-level view.
·       
Airspace
user approval of investment plans
o       May be seen
as too big a change in ANSP/airspace user cooperation.
o       User
willingness (and capacity) to commit to the adoption of new technologies, use
of routes and procedures and sharing of information required for effective
partnership.
o       Maintaining
the balance of performance and safety is critical and something that ultimately
the ANSP is best placed to determine – indeed it is the fundamental purpose and
goal of the ANSP. 
Risks
·       
Unless
a co-ordination mechanism is created between the airspace users, the risk is
created that the larger (national) airlines dominate the consultation process
with a disadvantage to the smaller users and non-local airlines.
·       
Airspace
user's aspirations may not align with the long term need of the network, as
their priority may be lower charges at short term, with a risk of neglecting
the need for investment in infrastructure and operational improvements; i.e.
supporting the SES cost targets at the expense of capacity targets. This would
require strong SESAR-based rules to ensure proper infrastructure development is
not hampered. 
The
option has been created based on several existing models. The main driver for
these models has been that unless consultation is properly structured and
motivated, it becomes a one-way venue for informing customers of decisions
already taken. Essentially a good consultation would start by defining;
·       
What
information will be provided
·       
Timely
provision of information
·       
Pro-active
advice from the ANSP of relevant changes/information
·       
Opportunity
for exchange of views
·       
Possibility
to influence decisions before they are formalised
·       
Explanation
of reasons for decisions
·       
Consideration
of the impact on the other party
·       
Sharing
of relevant data and plans on both sides (i.e. also from airspace users to
ANSP, in order to give the ANSP clarity of what is required in the future)
·       
Protection
of confidential information
As
an interim measure until SES has had a chance to improve the situation, IATA
has encouraged ANSPs and the users to establish partnership agreements –
referred to as Performance Partnership Agreements (PPAs) - which establish a
framework for the consultation process and its content.  Whilst the IATA PPA
model agreements are focused on commercial airlines the model could be extended
to cover arrangements with military and general aviation airspace users. 
In
the UK context the discussions ahead of setting the Control Period 3 formula,
NATS (NERL) and its users have undertaken a process of discussions, whereby
they are seeking to agree between each other the key assumptions that will
underpin the decision for the NATS price control. This followed a similar
framework to the “Constructive Engagement process” between the airport operator
BAA and its users, which is modelled on the approach taken at airports in Australia.
As a part of this process a Customer Consultation Working Group was established
to discuss issues in depth.  The partnership model was previously advocated by
CANSO and evolved at a time the CEO of the New Zealand ANSP was Chair of that
organization. The key features of the New Zealand model are:
·       
Consultation
is effectively continuous and focused on particular issues rather than
consultation for the sake of it.
·       
Additional
motivation is created with a profit sharing arrangement where airlines receive
annual rebates based on the profitability of the ANSP.
·       
Major
investments are approved by users who have to ultimately pay for them. Without
approval, the investments would not have been made and the cost estimates are
binding and come with funding agreements. For example:
o       Instrument
landing system (ILS) installation was approved by airlines with a linked
agreement to a fixed term adjustment to airport terminal area charges to fund
this. 
o       ADS-C system
for Oceanic control was implemented with customer agreement which involved the
commitment for 25% of the users to be equipped to use the technology (FANS-1A),
and only those users, paying an additional charge to recover systems and
Satellite  Communications costs. In the end the systems development costs
significantly exceeded the levels defined in the customer agreement, but the
cost overruns were borne by the ANSP in the form of loss of profit – the price
applied was the price agreed with users.  
It
should however be noted that in the New Zealand context there are fewer
ANSP/Customer relationships to maintain relative to Europe, which helps develop
strong inter-personal relationships and makes profit sharing easier. The
relevance of this example is that it illustrates that greater user consultation
and influence over ANSP decision making brings with it a requirement for more
responsibility being assumed and acceptance of consequences by both parties.
This includes binding commitments from the airspace users on future
requirements – in particular that they will equip aircraft or fly new routes. 
As there is no legal requirement to do so, it may be difficult to ensure
compliance by those airspace users that are less co-ordinated (third country
operators, private owners etc.), so some element of legal equipage mandates is
still required.
Cost
efficiency: Effective consultation is central to ensuring that an ANSP
understands the airspace user requirements.  However, ANSPs cannot meet the
needs of the users unless both sides are willing to share confidential
information of their near and long term operational requirements.  Hence
improved consultation is likely to increase an ANSPs reaction to airspace
users’ demands for downward pressure on costs, but there will be balancing
effects driven by other requirements. Also the fact that general and business
aviation and military aviation have priorities that are not always the same as
airlines priorities will affect the end result. For example access to airspace
often features high on their agendas and may need to be balanced with pure cost
concerns. Together with approval of major investment plans consultation is
expected to have a moderate impact on cost-efficiency even if the exact size of
impact depends greatly on local variables and the economic cycle in general
(cost is prioritised during economic downturn, whereas boom times are usually
accompanied by capacity concerns.)
Flight
efficiency: This option should have a positive effect on flight
efficiency as airspace users influence ANSPs to further improve routes.  They
may also increase ANSP motivation in applying new technology to improve flight
efficiency.
Environmental
costs: Any
improvement to flight efficiency or 'engine-on' delays (airborne holding,
taxi-times) will directly and positively impact environmental emissions.  There
are no expected noise benefits as that is not an immediate concern for the
airspace users.
Capacity
and delays: Delays provide the biggest adverse effect on commercial
airspace users. For instance ANSP staff shortage in key locations would reduce
immediate costs for the ANSP but disproportionally increase costs for the user.
This option is likely to have a positive effect on delays as airspace users
push ANSPs to solve capacity problems. Delay reduction tends to be attributed
to proactive air traffic management co-ordination between control centres,
improvement in staffing levels, improvement in industrial relations and working
practices. Closer working relationships with airline customers are also
significant if they engender an open exchange of information about future
capacity needs. Alternatively it could have a negative effect if users elect to
trade off delay for reduced costs i.e. if for example users were to opt to
defer investment in infrastructure that would reduce delay in return for lower prices.
Experience has shown that commercial airlines attitudes vary according to the
economic climate, whereas ANSPs need to continue to invest for the long term.
Many major ATM technology investments have a lifespan of 20-30 years, whereas
economic cycles span only 6-7 years and may companies focus on quarterly
profits. This causes a considerable risk to decision-making.
Administrative
cost: It
is expected that the consultations over ANSPs investment plans will require
more time and effort from the participating stakeholders and particularly from
the ANSPs themselves.  The enhanced consultation and preparation of the PPA's
as well as signing off the ANSP investment plans will require considerable
manpower effort from the airspace users as well as from ANSPs to prepare the
plans, to conduct consultations and to review. The airspace users might need to
buy expertise from consultants in order to increase the effectiveness of their
consultations. Based on experience from the airport charges consultation processes,
it is expected that this would require around one FTE at airspace user side and
1.5 FTE at ANSP side. It is expected that the administration costs will
increase by € 15 million[157]. 
Regulatory
costs: The
option will have no discernible impact on national budgets as all the work is
undertaken between the ANSP and the airspace users, with the national
authorities limited to checking that consultations have taken place, when they
make audits. 
Social
impacts: Any
social impacts would flow from reduction in staff or changes to working
practices as a result of downward pressure on costs. This may imply changes to
employee conditions and lower job quality. As with the performance target
options, this will most likely affect engineering and administrative support
staff.
Safety:
Since
the ANSPs and the airspace users have a mutual interest in safety, no negative
impact on safety is expected. Co-ordinated technology and procedural updates
may even contribute positively to safety.
Employment:
Whilst
very uncertain, it is possible that the downward pressure on costs will create
an impetus for reducing staff, especially in services that are not in demand by
the airspace users.
Option
2.3 ­– Option 2.2 + giving the airspace users groups a seat in the ANSP
governance
Description: This option
is proposed as an addition to the previous option, to give the three groups of
airspace users (airlines, general and business aviation and military) a seat in
the ANSP governance. It should enable these user groups to be more directly
informed of the ANSPs business plan and hence have a greater appreciation of
the rational for ANSP decisions. Users would also be in a more direct position
to influence ANSP decision making, and counter any politically biased decision
making.
In
this option users would directly influence ANSP decision making, and be able to
counter any politically biased decision making[158]. As
directors are typically bound to act in the best interests of the organization,
they may find themselves being somewhat conflicted between two opposing
interests. Hence, their involvement on an ANSP board may not be as significant
a step as ensuring that the ANSPs objectives are aligned with stakeholders.
The
form of any airspace user involvement is assumed to be through appointments to
the board (at the supervisory level in two-tier structures).In the UK such
representation is combined with equity positions, although this is not a
requirement. At the level of supervisory boards, stakeholder inputs will be
strategic in nature. As such they may be likely to make a positive contribution
to the overall direction of the ANSP, particularly concerning long term
investment plans and collaborations within and between FABs.
The
main considerations at a glance are:
Pros
·         
A
regular physical presence of airspace users at the centre of ANSP governance
creates a sharing of objectives and is likely to efficiently drive the ANSP
towards user interests.
·         
As
the governance positions give full access to documentation, they help
transparency and finding of common solutions.
Cons
·       
The
fact that only a few representatives of airspace users can sit at the board
requires strong airspace user co-ordination, which is difficult when
considering the diverging interests of the various user groups. 
·       
With
the representatives being e.g. employed by one airline but representing all
airlines, it creates also conflicts of interest for them.
·       
The
option is highly dependent on the quality of the user representatives and there
may be a lack of resource and skill in airspace representatives to serve in the
role.
·       
In
the EU based ANSP where this model is in action, NATS, it clearly does not
address all the issues.  NATS is the most expensive of Europe’s ANSPs and the
airlines continue to be critical, notwithstanding their shareholding.
Risks
·       
This
option involves an increased risk that the short term thinking of airspace
users may jeopardize strategic investments (SESAR etc.). The airspace user's
aspirations may not align with the network level interests, as their priority
may be lower charges at the cost of investment in infrastructure and
operational improvements.
·       
The
option gathers only moderate support from States and string opposition from ANSPs
and trade unions, which may reflect also on the political feasibility of the
proposal.
Comparative
governance models include Airways New Zealand which has some voluntary user
representation in a minority position, and NavCanada, discussed below. Drawing
on these models, there are a variety of practical issues to be addressed,
including:
·       
The
appropriate user representatives have to represent the ANSPs entire user
stakeholder base, as there will be concerns that persons in the board do not
represent all types of stakeholders. For instance, the interests of the major
commercial airlines are not the same as low cost carriers and general aviation
operators tend to focus on different issues than the airlines.
·       
Ensuring
that high calibre individuals are appointed, especially considering that they
are likely to be in a minority of the board representation will be a challenge.
On
the other hand the example of NavCanada is quite encouraging. The company was
formed in 1996 as a special purpose, non-profit entity managed by a stakeholder
board. The Board of Directors is made up of four major stakeholders to provide
direction to the Company. They are mandated to put the Company’s interest first
and to build the quality of the Company’s corporate governance practices. The
individuals are not allowed to be employed currently in their industry, i.e.
they are "arm's length" appointees.  There are 15 Directors - 4
airline (Air Transport Association of Canada); 1 business aviation/GA (Canadian
Business Aviation Association); 3 government; 2 union (Bargaining Agents
Association); 4 unaffiliated and unconnected; plus the President and CEO.
The
company's view is that the governance model has made it become more forward
looking in operations, with improved safety, stronger investment in technology
and more nimble business planning. The Board of Directors is supported by the
NavCanada Advisory Committee (NCAC) consisting of 18 members funded by
NavCanada to provide representation of airports and other small interests
(including the small GA groups) by organising and channelling their feedback. 
There are also other advisory and consultative committees: Air Navigation
System National Advisory Committee (ANSNAC), the Air Transport Operations
Consultative Committee (ATOC) as well as other regular working groups and
regional forums for additional consultation.  
The
Company produces an Air Navigation Service Plan typically updated every three
years for a seven year period.  Consultation is only on the operational and
technical requirements and not on the resulting costs and hence User Charges.
There is no restriction on Military occupying one of the three government
positions on the Board, but this has not happened as it could not be a serving
officer. There is a general argument that although NavCanada is a monopoly, it
requires little performance oversight as stakeholders are already so well
represented at the Board level and monitor performance. User Charges have not
gone up for ~ 8 years, making charges around 25% lower in real terms after its
formation.  Costs have been reduced by efficiency measures and staff
reductions.  There has been no consolidation of Area Control Centres as the 7
centres in operation are believed to be about right given the volume of
airspace, geography and time zones.
As
regards the demand for this option, it is interesting to note that even in the
public SES2+ consultation, the request for this type of full involvement was
lukewarm.
Figure V-2: Stakeholder replies to question
"Q2.2.2.7. Should the EU require that all airspace user groups are to be
involved in ANSP governance, in order to ensure focus on stakeholder value?
"
A
large share of stakeholders believes that involving all airspace users in ANSP
governance is not a good idea. These are mostly stakeholders from the ANSPs,
the representative and/or professional associations and trade unions. In particular
the ANSPs and trade unions overwhelmingly oppose such an inclusion. Also the
States are only lukewarm to the idea. On the other hand the military, civil
airspace users and the manufacturing industries agree strongly with this
proposal.
Cost
efficiency: Compared to the other options, this should be most
effective in improving cost efficiency as the airspace user groups are directly
involved in making decisions at the ANSP Board. However as was noted for
previous option, the cost-efficiency drive will most likely be somewhat
balanced by the differing interests of the various groups of airspace users and
the fact that many costs are influenced by external variables.
Flight
efficiency: As for cost efficiency – and with the same caveats – this
option has the greatest potential for improving flight efficiency due to the
direct involvement in decision-making.
Environmental
costs: Any
improvement to flight efficiency or 'engine-on' delays (airborne holding,
taxi-times) will directly and positively impact environmental emissions.  There
are no expected noise benefits as that is not an immediate concern for the
airspace users.
Capacity
and delays: This option would probably achieve the best result as
directors on a Board could be legally required to support the best solutions
for the ANSP to meet all user requirements rather than the individual’s sponsor
group. The governance structure should require arm’s length appointments (e.g.
see NavCanada & NATS models). Even if the different airspace user groups immediate
interests may differ, their involvement in decision-making is likely also to
improve commitment to the measures the airspace users need to take to implement
any capacity improvements.
Administration
cost: It
is expected that this option will include all the same administration costs as
mentioned for the previous option. It is not expected that the participation in
the Board will increase overall costs as Board members are normally compensated
for their work and this is funded through the route charges cost base as today
– unless the ANSP decides to increase the overall number of Board members, in
which case the cost of three additional members would be incurred. Additional
independent expert support might also be sought by airspace users and wider
consultation would still be necessary (see the NAV CANADA model). It is
expected that no new staff would be needed but the three persons from the
current staff within their stakeholder groups would have a new task to
participate in ANSP board meetings a few times a year. It is expected that the
additional administration costs will be negligible.  
Regulatory
costs: No
regulator costs are expected to be incurred as the arrangement takes place
directly between the ANSP and the airspace users.  
Social
impacts: As
in previous option, the social impacts may flow from the changes to working
conditions or reduction of staff necessitated by the efficiency measures or
technology changes. Since the stakeholder influence is expected to be stringer,
also the social and employment impacts may be somewhat higher.
Safety:
As
in previous option, the airspace users and ANSP share the same safety
objectives, so it would be unlikely for any safety impact to occur, except for
potential improvements through new technology or procedures.
Employment:
As
in previous options this may cause loss of employment being driven by airspace
users through any additional cost reductions, which will be offset by
employment increase at airlines and in the wider economy.

4          
Ineffective role of NSAs

As
described earlier, the EASA audits have revealed a considerable problem in the
resourcing of the National Supervisory Authorities (NSAs) and also on their
independence from the ANSPs they are intended to oversee. The variance in NSA
competencies and expertise was also noticed by the respondents to the public
consultation, where 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:
Figure V-3: Stakeholder consultation question on
whether EU should legislate to ensure more coherence amongst State authorities.

Based
on this different options for improving NSA expertise, resources and
independence are considered below.
Option
3.1 – Do nothing.
Description: This would
retain the current situation, where NSAs are underresourced and often dependent
on the ANSP's they are supposed to oversee.
The
advantages and disadvantages of this option may be summarised as:
Pros
·       
Low-cost,
minimum effort for States on the short term.
·       
Convenient
for States that only want functional separation.
·       
EASA
may already require a corrective action plan from States to address staff
shortages (which would increase the States effort in longer term anyway).
Cons
·       
Inadequate
resourcing of NSAs manpower and skills.
·       
Insufficient
oversight creates increased safety risk and sub-optimal functioning of the
performance scheme.
·       
Problems
persist both nationally and with cross-border and FAB level oversight. 
·       
Possibility
of sanctions for inadequate NSA resourcing (infringement procedures).
Risks
·       
Problems
with NSA resources will eventually inevitably lead to safety issues in the
organisations to be overseen. 
·       
Furthermore
as long as the NSAs are dependent on the ANSPs for resources, they will be
encountering a conflict of interest in administering the performance scheme.
Under
this option, the major issues facing NSA development would not be addressed.
Inadequate resourcing would continue to be a barrier to full and effective NSA
operation, not only in terms of manpower but also technical skills. The EASA
audits and required corrective actions may enforce initiatives from NSAs to
solve the resourcing issues, but this correction would come late, de
uncoordinated and perhaps cause unnecessarily high costs if it would be
implemented in a hurried manner instead of proper planning. The manpower
deficit continues as the dominant issue, with significant shortages having been
reported. This has, in certain cases, been solved by secondments from ANSPs,
but this inevitably represents a high-cost temporary solution and is legally
dubious vis-à-vis the requirement for NSAs to be independent of the ANSPs.
While it ensures that NSA staff members are technically up-to date, it also has
the capacity to weaken the independence of the regulatory body.
In
terms of technical and professional skills, the November 2012 NSA Peer Review
Report indicates a deficit in training capacity for NSA functions. This is a
serious problem, as it influences the capability of all new NSA staff members.
The
institutional situation of NSAs is also mixed. Seven of the 32 NSAs referenced
in the Peer Review Report reported that they are functionally separated from
their service-provision counterparts, while the remaining NSAs have reported
more complete separation (institutional/organisational). However the evidence
from some of the initial EASA audits casts some doubts on how complete that
separation is even when institutional/organizational separation has been
reported
Taking
these factors together, functional separation may generally be seen as a sign
of inadequate NSA development, though it does not always automatically preclude
proper resourcing. France shows by far the highest NSA resourcing level, and
has a well-developed and recognised NSA in operation, despite it being only
functionally separated from its service-provision counterpart. That said, even
the French NSA uses secondments from its ANSP to ensure adequate staffing.
The
resourcing and skills issues mentioned above limit the ability of NSAs to
address issues relating to safety and performance of the ANSPs. Whilst we have
still very good safety levels, aviation safety cannot be built on a single
safety net, but must include several layers of safety nets and oversight
arrangements.
Art
4(4) of Regulation 549/2004 already requires that “Member States shall ensure
that NSAs have the necessary resources and capabilities to carry out the tasks
assigned to them.”, which places the responsibility firmly on States to find
effective funding and resourcing solutions for NSAs, and equally carries the
possibility of sanctions being applied in cases where this is not done. The
interviews of NSAs have not been able to clarify why some States have not
availed themselves of the possibility to gain adequate resources through route
charges if the budgetary means are insufficient. It was however speculated that
this may be due to a combination of States being disinterested (not a pressing
issue), lacking motivation and that NSAs were not mature enough to press the
issue.
Taken
overall, a Do-Nothing option contains unaddressed risks. Through its Universal
Safety Oversight Audit Programme, ICAO has identified a strong correlation
between inadequate safety oversight and poor safety performance (evidenced by
accident and incident rates). This therefore supports a conclusion that
measures should be taken to enhance safety oversight at every opportunity. The
EASA audits of the first five NSAs in 2012 also indicate many shortcomings in
their supervision stemming from either a lack of resources or a lack of
independence. Therefore it is only possible to achieve both maximum performance
in service-provision and optimal levels of safety if fully effective regulatory
oversight is applied.
Option 3.2 –
Introduce mutual co-operation and EU-level co-ordination and pooling of experts
Description: This would
introduce a strengthened EU-level co-operation between the NSAs, thus allowing
them to exchange best practises, participate in trainings and take advantage of
pooling of national experts under EASA auspices in the same manner as is being
started for air operations and airworthiness experts.
The main
advantages and disadvantages of this option may be summarised as:
Pros
·       
Addresses
staff shortages in an efficient way.
·       
Strengthens
cross-border (FAB) oversight.
·       
Levels
oversight capabilities.
·       
Helps
NSAs meet objectives for safer transport by considering end-to-end safety of
flights within Europe. 
Cons
·       
Potential
legal barriers that need to be addressed.
·       
Requires
funding arrangements.
·       
Language
issues.
·       
EASA
remit does not address all aspects of performance scheme.
·       
Possible
conflict of interest in EASA providing support and performing inspections at
the same time. 
This
option exploits the opportunities for further cooperation between Member
States, as well as coordination at the European Community level, including
under the auspices of the European Aviation Safety Agency (EASA). Many NSAs are
still developing their organisations and capabilities, nine years after their
establishment under the first SES package. Until now, their access to common
information has been via common support forums, including the Peer Review
system. Although a means of assessing progress, the way the Peer Review system
was applied did offer an element of learning and exchange of vital information.
However the peer reviews had their problems as means of regulatory oversight
because they relied essentially on voluntary reporting, which is why they are
now being discontinued, and replaced with the EASA Standardisation Programme
which, being a more formal audit-based system, does not offer the same support
benefits. 
Cooperation
between States, including the exchange of, and pooling of, personnel has the
potential to be an effective and efficient mechanism for dealing with resource
deficits. EASA is already setting up a system for pooling experts, starting in
the fields of airworthiness and air operations. It also greatly assists
cooperative learning and exchanges of information and best practice between
equivalent regulatory organisations, helping to redress deficiencies in NSA
skills areas leading to a more consistent approach to safety oversight.
Moreover, it is possible to consider resource-pooling arrangements constructed
around FABs, with an NSA for each FAB with inter-state agreements on its
operation.
One
of the survey questions was whether other organisations could support NSAs,
such as other NSAs or organisation with similar expertise. However there was no
overwhelming support for this idea, presumably because already today the amount
of different organisations and forums is causing confusion amongst the
stakeholders:
Figure V-4: Stakeholder consultation question on
whether someone else than EASA (or future European Aviation Authority) should
be entrusted with supporting the NSAs
. 
Undertaking
such cooperation brings some practical challenges. External support must
operate within national legal frameworks and systems. Differences in language
also have to be overcome.  In addition, funding arrangements must be agreed to
cover the additional costs.
Nevertheless
additional budgetary resources are not forthcoming in the Member States and the
increasingly cross-border nature of service provision in FABs requires also the
authorities to migrate their oversight to an international level. Increasing
NSA capabilities in this way increases regulatory effectiveness which, in turn,
improves safety performance not just in ATM but, as a result, across the
aviation system. Such a total system approach to safety is consistent with EC
objectives in putting the airspace user at the centre of the transport system.
It will also support key ATM safety objectives including oversight of the
implementation of a Just Culture environment.
Significant
NSA resources do exist in a small number of States. Though necessary for
national commitments, the potential nevertheless exists for smaller NSAs to
buy-in the expert resources of larger NSAs and support bodies, and to exploit
them as potential training grounds. Such a pooling arrangement would also give
the ANSPs the possibility to specialise and share tasks. The key issue
governing feasibility of this approach is availability of Member States
funding, and mechanisms to provide solutions here are urgently required.
Coordination
at the EU level is vital in ensuring a standardised approach to safety
oversight. In this regard, Commission Implementing Regulation (EU) No 1034/2011
on Safety Oversight in ATM and ANS has provided a common, high-standard
benchmark for the safety aspects of NSA operation. Comprehensive Guidance
Material is also being created to support this Regulation but consultation
feedback has demonstrated the need for this material to be effectively supported
and promoted, and further complemented as necessary. EASA can play a central
part in such a process of developing and maintaining acceptable means of
compliance and guidance material. However it should be noted that economic
regulation is likely to remain outside of EASA’s remit for the foreseeable
future and this aspect has to be covered in the context of the Performance
Scheme.
Cost
efficiency: Cost efficiency will only be optimised when all aspects of
SES are operating to their fullest extent. This includes a supervisory
environment ensuring that all ANSP developments and operations are fully
compliant with applicable regulations. More importantly the performance scheme
hinges on the national authorities being independent and expert enough to
assess their ANSPs performance and to set realistic, but ambitious targets on
them. Hence effective NSA operation is expected to have a positive effect,
although this is difficult to quantify. 
Flight
efficiency: As for cost efficiency NSA skills play an important role in
ensuring the ANSP delivers optimal performance.
Capacity/delays:
As
for cost efficiency NSA skills play an important role in ensuring the ANSP
delivers optimal performance.
Administration
costs: It
is not expected that this option would have any impact on ANSPs administration
costs.
Regulatory
costs: Currently,
the NSAs are required to increase their staff by approximately 25% on average
in order to tackle the existing staff shortages and fulfil the legal
requirements. The current understaffing in the European NSAs is at the level of
104 FTEs in total[159].
It is assumed that under the do-nothing option, EASA audits would require
corrective action plans to solve the staff shortage problems. Hiring new staff
for all these positions is expected to cost the NSAs some € 17 million. 
The
option is expected to bring a mechanism allowing on expert pooling between
different NSAs. This solution would bring cost savings. It is assumed that the
average costs of employment of one person at an European NSA is € 162,000 annually[160]. It is
expected that the expert pooling mechanism would not solve the entire staff
shortage problem but that it would solve the problem in 50%. It is expected,
therefore, that this option brings a decrease of costs for NSAs on national
level due to lower staffing numbers on national level and significantly
decreases understaffing (by 50%). It may be expected that the experts who form
part of the expert pooling between the NSAs would require additional training
(i.e. languages) and it is further assumed that the average budget for training
for each of the experts would be € 10 000 per year. Additionally, as
the expert pooling would require a coordination mechanism, a slight increase of
costs on the EU level is expected. Finally, it is expected that experts would
travel within the FABs to support other NSAs. It is assumed that the experts
being part of the pooling would travel once in two months for an average period
of 14 days. The subtotal costs of travels per expert would equal € 3800 per trip[161]. The option is
expected to bring cost savings compared to the do-nothing option of some € 6.5 million
in total on the European level in the first year. The detailed calculations are
presented in in the table below. As said above, it is expected that option will
not only bring the decrease of costs but also an increase in oversight quality.

Figure V-5: Comparison between Options "do
nothing" and "EU level support & co-ordination and pooling of
experts"
   || Do-nothing || Option 1 
 Expert pooling - staff & training ||   ||   
 Costs of employment (EU average) || € 161 951 || € 161.951 
 Impact of expert pooling on staff needs (in%) ||   || 50% 
 Staff required to fulfil obligations || 104 || 52 
 Staff costs required to fulfil obligations || € 16 842.862 || € 8 421.431 
 Additional training costs (i.e. languages) per person || € 0 || € 10.000 
 Additional training costs (i.e. languages) in total || € 0 || € 520.000 
 Additional annual travels per person || 0 || 6 
 Average costs per trip (2 weeks, EU flight, full DSA) || € 3 800 || € 3 800 
 Additional travel costs (mainly within FABs) per person || € 0 || € 22 800 
 Additional travel costs (mainly within FABs) in total || € 0 || € 1 185 600 
 Tool - Mechanism for expert pooling on EU level || € 0 || € 5 000 
 Costs of employment (EU average) of 1 person per year for coordination of expert pooling || € 0 || € 161 951 
 Organisational separation ||   ||   
 Additional admin staff || 0 || 0 
 Costs of admin staff per annum || 0 || 0 
   ||   ||   
 Total costs || € 16 842 862 || € 10 293 982 
   ||   ||   
 Net saving ||   || € 6 548 881 
Environmental
impact: Improvements
in flight efficiency may result in corresponding improvements in reductions for
emissions.
Social
impacts: An
increased number of job opportunities for highly specialised operational and
engineering staff would be opened. This would favour experienced staff from the
ANSPs and give some balance to the reductions in ANSP numbers arising from the
performance scheme.
Safety:
There
is a well-known link between oversight quality and safety levels, so any
increase in NSA quality can be expected to improve safety levels.
Employment:
Since
a significant shortfall exists in the NSA human resources, any measures to
improve the situation will also increase employment opportunities. These
opportunities would probably contain similar job profiles as the redundancies
in the ANSPs so some cross-feeding may take place.
Option
3.3 – As option 3.2, but also institutional separation of NSAs from the ANSPs
Description: This option
would combine the EU-level co-operation of previous option, but add an explicit
requirement for the NSAs to be institutionally separated from the ANSP's that
they are intended to oversee, in order to ensure full impartiality and
independence.
The main
advantages and disadvantages of this option may be summarised as:
Pros
·       
Adequate
separation provides assurance of autonomous NSA operation.
·       
Definition
of separation criteria can form a commonly agreed basis for independence.
·       
Strengthens
independence of NSA to challenge ANSP towards better performance and safety.
·       
‘Explicit
Independence’ could ensure ‘true’ separation.
Cons
·       
Requiring
yet another change to NSA scope while most of them are not yet on full speed after
9 years under current scope.
·       
Harder
to retain the best staff who may prefer secondment to the NSA rather than
permanent transfer. In most States the ANSP pay levels are higher than at the
authority.
Risks
·       
Considerable
political risk as the States that still have only functional separation will
oppose any new measures.
This
option follows the model of the previous option for co-operation and pooling of
resources, but adds to it a requirement for full (institutional) separation of
the NSAs from the ANSPs that they oversee. Currently Art 4(2) of Regulation
549/2004 requires "adequate separation at the functional level at least"
between the NSAs and ANSPs.
In
practise most States have followed standard aviation practise and established a
level of separation that goes beyond functional. Under Institutional
Separation, the service-provision and supervision entities are fully separated
and constitute formally independent legal personalities with complete autonomy
for the activities they perform. This level of separation gives ultimate
clarity in terms of legal and operational responsibility. Here, the “separation
criteria” are not only met, but built in to the institutional structures. a
number of key “separation criteria” have been met, and are seen to have been
met. These criteria may be summarised to include:
·       
Separate
legal personality and organisational structure to the extent needed for the NSA
to assess compliance with regulations and take appropriate action in cases of
non-compliance;
·       
Separate
reporting lines in the NSA and authority (except possibly at ministerial
level).
·       
Funding
and staffing arrangements which are separate so that they do not hamper or in
any way restrict the NSA in performing its duties, and ensure independence from
pressure from the ANSP;
·       
Leadership
and budget of the NSA to be set by the State’s Parliament or similarly
independent entity.
·       
Separate
public identity, including publicity and communications arrangements;
·       
Visible
empowerment from the national governing body (Parliament, Ministry);
·       
Stringent
requirements on individuals for independence.
 Cost
efficiency: There could be a strong impact on cost efficiency if NSAs,
or at least that component of them dealing with the performance scheme, were to
be institutionally separate. This might have a similar effect as the
Performance Scheme Option 3 (i.e. a cost reduction of around € 150 million
per annum), and should at least serve to support the performance scheme options
2 or 3. 
Flight
efficiency: As for cost efficiency there is likely to be a positive
effect with greater NSA independence.
Capacity/delays:
As
for cost efficiency there is likely to be a positive effect with greater NSA
independence.
Administration
costs: It
is not expected that this option would have any impact on ANSPs administration
costs.
Regulatory
costs: This
option includes the previous option 2 and additionally, it imposes an
organisational separation between the NSAs and ANSPs. All of the regulatory
impacts of option 2 will thus be applicable to this option as well.
Additionally, the organisational separation will result in the increase of
regulatory costs by creating new organisations in these countries, where
currently there is no organisational separation. According to the 2011 SES
implementation report (published June 2012), there are a total of 37 NSAs in
the 29 SES States. A Number of States have a small separate NSA for example 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. There are also a total of 28 fully separated
NSAs in 29 SES States[162]. This
implies that the costs of employment would increase for these 8 NSAs in order
to separate them organisationally from the ANSPs. It is assumed that on average
10 additional administrative staff would be hired in each of these NSAs[163]. The costs
of employment of these staff are assumed to be at the level of 2/3rds of the
NSAs European average as presented above. The option 3 is expected to bring
additional costs of some € 0.9 million in total on national level in
the first year. The detailed calculations are presented in the table below.
Figure V-6: Comparison between the "Do
nothing" and "Option 2 + full separation" options 
   || Do-nothing || Option 3 
 Expert pooling - staff & training ||   ||   
 Costs of employment (EU average) || € 161 951 || € 161 951 
 Impact of expert pooling on staff needs (in%) ||   || 50% 
 Staff required to fulfil obligations || 104 || 52 
 Staff costs required to fulfil obligations || € 16 842 862 || € 8 421 431 
 Additional training costs (i.e. languages) per person || € 0 || € 10 000 
 Additional training costs (i.e. languages) in total || € 0 || € 520 000 
 Additional annual travels per person || 0 || 6 
 Average costs per trip (2 weeks, EU flight, full DSA) || € 3800 || € 3800 
 Additional travel costs (mainly within FABs) per person || € 0 || € 22 800 
 Additional travel costs (mainly within FABs) in total || € 0 || € 1 185 600 
 Tool - Mechanism for expert pooling on EU level || € 0 || € 5000 
 Costs of employment (EU average) of 1 person per year for coordination of expert pooling || € 0 || € 161 951 
 Organisational separation ||   ||   
 Additional admin staff || 0 || 80 
 Costs of admin staff per annum || 0 || € 8 581 760 
   ||   ||   
 Total costs || € 16 842.862 || € 18 875.742 
   ||   ||   
 Additional costs ||   || € 2 032 880 
It
is expected that other issues from a requirement for full independence as
sketched in the option definition above, do not come at an additional cost
compared to the do-nothing option. 
Environmental
impact: Improvements
in flight efficiency may result in corresponding improvements in reductions for
emissions.
Social
impacts: As
in previous option, an increased number of job opportunities for highly
specialised operational and engineering staff would be opened. Additionally a
small number of additional administration staff would be required in 8 NSAs to
transfer operations to a fully independent NSA. This would favour experienced
staff from the ANSPs and give some balance to the reductions in ANSP numbers
arising from the performance scheme.
Safety:
There
is a well-known link between oversight quality and safety levels, so any
increase in NSA quality can be expected to improve safety levels.
Employment:
As
for previous option, but additionally an estimated 80 posts would open in the
newly independent NSAs.

5          
Performance scheme governance mechanism

The
performance scheme is perhaps the most complex mechanism being considered in
this impact assessment. It involves a number of actors, each with their own
interests and often conflicts of interests. More importantly the mechanisms by
which the different factors (cost, capacity, flight efficiency and safety)
interact are delicate and involve numerous variables. A certain amount of
experience has been gained during the years since the performance scheme was
created:
Context[164]
Cost efficiency: During the target
setting process for the first reference period cost efficiency was the greatest
area of debate. Being natural monopolies, the ANSPs will continue to be
cost-inefficient unless regulated. It is realistic to assume that in the
current system with State intervention it may be difficult to achieve a higher
level of ambition than minus 2% per year reduction in costs. At the same time
the PRB/PRU considers that an annual minus 5% is possible over the next decade
as there is considerable duplication of costs and inefficiencies built into the
current programmes. To achieve a target profile of minus 5% regardless of
traffic evolution would mean delivering an annual extra benefit of around € 300 million
in ATM cost efficiency. Naturally this benefit would not be linear as
it involves some up-front investment and depreciation of old infrastructure
before the full benefits start to accrue.
Flight
efficiency: Indirect losses generated by the system are currently
assessed by the PRB at € 3.8 billion per annum. The current
performance target is to improve flight efficiency by 0.75% in 2014. Already
today it can be observed that it is unlikely that this modest target will be
achieved.
The primary gains to be made in the area of
flight efficiency are a small contribution from horizontal flight efficiency[165] and a much
larger gain in the vertical profile by reducing level-off periods, which are
wasteful in terms of energy management of the aircraft[166]. There are
also gains to be made in the ground management of aircraft[167] and the
whole loss is roughly divided in equal portions. 
As for cost efficiency,
more ambitious EU-level target setting and greater challenge at the State level
should lead to higher targets being set for flight efficiency. However
flight-efficiency is an area, where much greater potential exists for
improvement. Already in the RP1 target setting, the PRB provided the following
view of flight efficiency[168]:
 Estimated inefficiency actionable by ANS || Fuel/flight || Fuel total || CO2 total || % 
 Estimated avg. Within European airspace || 4.5t || 42Mt || 133Mt || 100% 
 Horizontal en route flight path || 169kg || 1.7Mt || 5.4Mt || 3.9% 
 Vertical en route flight profile || 25kg || 0.3Mt || 0.8Mt || 0.6% 
 Airborne terminal || 51kg || 0.5Mt || 1.5Mt || 1.1% 
 Taxi-out phase || 32kg || 0.3Mt || 0.9Mt || 0.7% 
 Total || 277kg || 2.7Mt || 8.6Mt || 6.2% 
At the time the PRB regarded
the above numbers as a theoretical maximum under the existing system, as in
practice a large number of factors need to be accounted for, such as the
availability of airspace, the interaction of meteorological factors and
trade-offs between flight level and capacity (due to sector configuration
strategies). The table also includes vertical flight efficiency, which impacts
fuel burn but less the flight time. Based on PRU figures for 2011, the
consultants have estimated that the 0.6% figure above costs airspace users an
additional €135M per year above the theoretical optimum, based on fuel costs of
€0.6 per kg[169]:
 Phase of flight || Average additional fuel burn (kg) || Cost per flight (€) || Total for all flights 
 Enroute || 6 || 3.6 || € 35M 
 Climb || 3 || 1.8 || € 18M 
 Departure || 14 || 8.4 || € 82M 
 All || 23 || 13.8 || € 135M 
If the remaining flight
inefficiencies are valued based on the average cost of 1min of delay (€81 in
2010 prices) the total flight inefficiency would be an annual additional cost
of around €4B. Hence even a 50% improvement might generate benefits approaching
€2B per year. Whilst the exact amount achievable needs further study, the PRB
has indicated that this level might be achievable.
Experience from targeting setting on flight
efficiency during this reference period has shown that more can be done in this
area but an important countervailing action exists in the cost efficiency area
where different charging levels dictate that aircraft are routed around areas
of high cost thus negatively impacting on flight efficiency[170]. It can also
be observed that at times routes have been generated by ANSPs or Member States
to maximise return instead of reducing flight times. Another example is that we
are aware of moves by some Member States to agree that where routes are moved
due to flight efficiency reasons, the plan is that compensation charges would
apply to reduce the financial loss on the state/ANSP losing the profitable
route. This is utterly counterproductive. The purpose of changing the route is
to reduce costs not maintain them - thus this will need to be countered. 
However as the people who are ultimately
responsible
for setting the target are also the people who are agreeing to the rules, it is
likely that flight efficiency improvements will continue to generate very
little in savings for airlines. By maintaining the current target profile the ANSPs/states
would maintain the current indirect costs of approx. € 4 billion per
year and transfer indirect cost to direct cost through these counterproductive
cost transfer mechanisms. Savings estimated by the PRU in the area of € 1 billion per
year are possible by achieving slightly higher targets. Effective targets would
need to take into account also vertical flight efficiency. This would suggest
that an overall flight efficiency target of 2 % could achieve approximately 1.5
billion € in airborne savings and application to the ground of taxi-time
management targets could achieve at least an additional 0.5 billion € if
measures were introduced across all necessary airports. (i.e. airports where
taxi times are constricted) To achieve these levels of efficiency with
additional gains of total 2 billion € per year would require removal of
state interference in the target setting process. 
Capacity: Capacity management
effect is centred on the core of Europe and a small number of outlying states
who have a large effect on the network[171]. Most
European states are not capacity limited except during exceptional conditions
such as strikes, weather disruptions etc. Therefore there is to a certain
extent an overcapacity in Europe as some states over-deliver because of
geographical location. Thus the targeting here becomes critical on key states
and it is here that problems occur as one of the key problems is aircraft
routing where routes are sometimes fixed by ANSPs/states to maximise income.
Programs such as free route airspaces have shown that where they are applied,
capacity and flight efficiency are both affected and improve performance.
However, as with all operating systems there is a cost to adjust capacity and
the closer one gets to the economic optimum the higher the marginal cost
becomes. The primary question here is therefore how much users are willing to
pay for incremental capacity improvements. Delay can be further increased but
there is a corresponding increase in costs as well due to required investment
etc. As a rule of thumb experts use that 1 min in average ATFM delay costs € 1 billion in
the end to users. Cost optimum models used by the PRB suggest we could achieve
0.35 min delay and this would be estimated at € 350 million.
On the understanding that it is unlikely to achieve target levels lower than
the current target level, which is 0.5 min delay, eliminating Member State
intervention will generate additional savings of € 150 million
per year.  
Environmental and noise impact: Any
improvements in flight efficiency will deliver also corresponding emissions
benefits and they reduce the unproductive engine running time and hence fuel
burn and emissions. That said, it must be noted that due to the trade-off
between emissions and noise when using optimal climb and descent profiles, this
would somewhat concentrate additional noise around the immediate vicinity of
airports. As discussed under flight efficiency, the PRU has estimated that
there is a 6.2% inefficiency actionable by ATM. Furthermore, it estimates that
this equates to 8.6 million tonnes of CO2, based on simple ratios
between fuel burn and quantity of emissions (see: ‘Standard Inputs for Eurocontrol cost benefit analyses’,
2007. Note that other pollutants have much smaller ratios to fuel burned: NOx =
10.3 kg/tonne fuel, SO2 = 1kg/tonne fuel). Extrapolating this value
to the ranges determined for flight efficiency, the range in CO2
reduction is likely to be between 0.2 – 4.3Mt.
Safety:  currently it appears
that the performance scheme has had no impact on safety levels. However it
becomes increasingly important to enforce also the safety aspects of the scheme
as targets are made more stringent and the temptation to take safety shortcuts
in order to reduce costs may grow.
Option
4.1 – Do nothing
Description: This would
retain the current situation, where targets are set, but Member States continue
to defend their ANSP's and the likelihood is high that national targets remain
below European targets and even those are not achieved in reality.
The
main benefits, disbenefits and risks identified for this option are:
Pros
·       
Least
political opposition
·       
Reference
Period 1 (RP1) could be regarded as a trial and the mechanism may work better
in RP2 through better execution (lessons learned).
·       
There
is a possibility that external industry pressure on the PRB would occur even if
the PRB/PRU were to be split from Eurocontrol, as the main source of
benchmarking information is from service providers.
Cons                                                                                                                    
·       
ANSPs
and Member States will try to influence PRB/PRU activities. This could impact
target setting, performance plan assessment and objectivity of analysis of past
performance.
·       
ANSPs
and Member States will push for less stringent targets throughout the
comitology process, as was witnessed in RP1 and RP2 revision discussions.
·       
Airspace
users have an increased feeling of lack of effective control of ANSPs. 
·       
Slower
rate in achieving performance improvements to EU network.
·       
Concerns
that FAB level targets proposed for RP2 will have the unintended consequence of
slowing down the performance scheme where the Member States are unable to agree
on, e.g. asymmetric cost reductions.
·       
Corresponding
reduction in anticipated macro-economic impact.
Risks
·       
Not
seeking to strengthen target setting process undermines achievement of other
reforms.
·       
Repeated
disappointment in the performance scheme redirects the ATM community effort
elsewhere.
·       
Target
setting would work better if incentives driven in ANSPs – i.e. Opportunity for
gain/pain share.
As
regards target setting, the ‘Do nothing’ option should assume that the
following changes will be implemented as currently planned:
·       
The
performance scheme will follow the current proposals for RP2, including the
proposed new schedule[172]. 
·       
New
PRC Members selected under the current system at or around the start of RP2.
In
this option, the PRB and PRU may be subject to continued pressure from Member
States and the industry more widely. This may increase if the targets are made
more demanding and also prior to RP2, where shortcuts in RP1 (such as deferred
investment) need to be addressed in RP2. Also, as Eurocontrol becomes more
operationally focused around the Network manager, the PRU will increasingly be
exposed to day-to-day industry pressure. The option is likely to result in:
Cost
efficiency: A continuation of the "lowest common denominator target"
being agreed by the Single Sky Committee would be likely. Overall, it has been
estimated by the PRB, that the cost efficiency targets could have been an additional
1-2% higher in ambition than actually achieved in RP1.
Flight
efficiency: As such the option would be unlikely to cause much change in
flight efficiency, unless delays become such an issue that aircraft need to be
continuously rerouted. . 
Environmental
impact:
Similarly to flight efficiency any impact would be a finction of capacity
constraints force aircraft to fly longer routes.
Capacity/delays: Whilst the do-nothing
option would not as such change the baseline situation, shortfalls in
investment that may have been deferred during RP1 may come back to take their
total on capacity-building measures during RP2. This would in turn cause more
pressure to be more lax on delay targets during the next reference periods. 
Administration
costs:
The option is unlikely to have any impact on current administration and regulatory
costs.
Social
impacts: Even
the current performance scheme is expected to have a limited negative impact on
employment and working condition. Even it is expected to lead to a moderate efficiency
drive, so negative impacts on employment and working conditions cannot be fully
ruled out.
Safety: Normally a
do-nothing option should not impact on safety.
Option
4.2 – Reduced Member State involvement in the target setting process 
Description: This option
would reduce Member States influence in the target setting process by moving
from the current regulatory comitology procedure to an advisory procedure and a
stronger role for the PRB, both institutionally (located under the Commission
to reduce outside pressure) and as an advisor.
The
main benefits, disbenefits and risks identified for this option are:
Pros
·       
The
conflict of interest arising from close relationship between Member States and ANSPs
becomes less harmful as the States are further away from the target setting
process.
·       
The
option goes deeper than present benchmarking analysis by building capability of
the PRB to make judgements on plans and potential for improvement.
·       
Commission
nominated members reduce risk of suboptimal target setting and performance plan
assessment.
·       
Commission
is able to bring in experts to the PRB from outside aviation to get a different
perspective.
·       
Greater
accuracy in performance plans by more explicit linking of investment to unit
rates.
·       
Enables
SESAR investment to be monitored to demonstrate and adjust overall coherence.
·       
Creates
transparency of investments that are part of approved SESAR deployment and
those that are to continue current operations. Such transparency would then
provide insights into the investment decision of ANSPs in respect of target
setting and allow the Deployment Manager to be better informed of relevant
issues.
Cons
·       
If
the capability of the PRU is not increased to cover more technocratic skills,
there is a risk it becomes involved in protracted service provision arguments.
·       
May
lose the influence of those Member States that make a positive contribution to
the performance scheme.
·       
Despite
measures to improve PRB independence, there will always be a degree of
potential dependence from background of members as long as they are recruited
from inside the ATM industry.
·       
Potential
influence remains via PRU, which performs most of the analysis and data mining
work for the PRB, as long as the PRU remains part of the increasingly
operationally focused Eurocontrol.
Risks
·       
There
is an increased risk of political opposition if Member Sates see this option
more as a landgrab than a genuine attempt to improve the performance system
·       
Commission
would also need to improve its understanding of the ATM system, if it is to
appoint all PRB members.
This
option is for less Member State involvement in the target setting process and a
shorter overall process based on technocratic input from PRB. Additionally all
PRB members are to be nominated directly by the Commission, (independent of
PRC). Nomination of PRB members by the Commission gives the opportunity to
oversee that the membership profile is balanced and also to include regulatory
expertise from other industries. In this sense the PRB may become more like a
Board of Directors with reduced ANS operational and business knowledge. It
would therefore also require additional support in this area from the PRU.
Based
on discussions with the PRU and PRB the set-up could be formulated so that:
·       
The
PRB decisions would remain advisory.
·       
The
PRB would be nominated by the Commission. A sub-option would be to move it
organisationally under the Commission (currently it remains separate, although
Commission pays for its budget)
·       
The
PRU would increasingly focus on the EU performance scheme and possibly also
include some level of functional separation from the rest of the Eurocontrol
organisation. However it would remain part of Eurocontrol to ensure
availability of Eurocontrol data to PRU.
·       
The
current scheme for EU level target setting is maintained.
·       
The
PRB proposes the EC nominal targets for Member States. Member States respond
with an assessment of feasibility, performance plans and provide supporting
documents to evidence the impact of the targets. 
·       
Member
States to supply the PRB with ANSPs business and supporting plans, (operating
plans, detailed capital expenditure plans, staff plans, incentive schemes, long
term (10-15 years) investment plans etc.), as well as performance plans, to
support the PRB decision making. I.e. to allow the PRU/PRB to provide
appropriate advice to the Commission and SSC, there must be no asymmetry of
information between the PRB/NSAs, Member States and ANSPs.
·       
In
support of monitoring, ANSPs detailed capital expenditure plans to be made
available to the PRB on an annual basis. Such plans should distinguish between
SESAR deployment and other investments and be in a common format to enable
comparison at the EU level.
·       
Investment
plans must to be open to external audit rather than be wholly self-reporting as
is the case with the current Eurocontrol LSSIP reports.
·       
The
duration of the process would be shorter than currently planned for RP2. Final
decision on plans and targets would be done in the Single Sky Committee on a
Commission proposal, using the delegated acts procedure. 
Cost
efficiency: A change of decision making process from implementing acts
to the new delegated acts procedure under the Lisbon Treaty is likely to allow
for more ambitious targets being set at the EU level. This means that the
targets may be set faster and they could be more in line with those advised by
the PRB. At the level of national performance planning, greater consistency
between the State and EU level is likely to be achieved. This means also that the
component plans of States targets should reconcile with the EU targets. The
development will be driven by increased transparency which creates a challenge
to ANSPs business planning from a more technocratic PRB with access to the same
information and assumptions. A PRB nominated by the Commission and embodied
with more regulatory experience, including from other industries, should also serve
to ensure more formal independence. The outcome of this more challenging
environment should be higher targets set at the EU level, with performance
plans to match at the State level. If the PRB was to be moved under the
Commission, maintenance of this independence would be more guaranteed also for
the future. Even assuming a partial achievement of the 1-2% tighter targets,
analysis of the PRB has estimated that the cost-efficiency improvements
compared to the current situation would most likely be in the order of € 300
million per year. 
It
could be conservatively considered that the effect of this option will be to
deliver a cost efficiency target that stays annually 1.5% above that of the do
nothing option. If for example, the Member States were normally to agree a
target increasing at 3% per year for RP2, but with this option the target were
to be 4.5%, the difference in costs would be ~€ 1500 million. I.e. the 1.5%
might translate to a saving for airspace users of ~€ 1500 million for RP2,
hence some € 300 million on average per year. If the PRB was situated
under the Commission and hence separated more completely from industry
interests, the likelihood of this improvement being sustained would probably be
higher even if the maximal improvement itself would most likely not change in
magnitude as it would be constrained by feasibility and social pressures.
Flight
efficiency: As for cost efficiency, more ambitious EU-level target
setting and greater challenge at the State level should lead to higher targets
being set for flight efficiency. The effect may will be even bigger that for
cost efficiency, as flight efficiency causes considerable secondary costs in
fuel burn and delays to the airspace users. 
Environmental
impact:
Any improvement in flight efficiency achieved by setting higher targets will
directly and positively impact environmental emissions. There are no particular
benefits in this option that would have an impact on noise, which is
predominantly an issue for airport localities and includes a trade-off with
emissions.
Capacity/delays: Also as for
cost efficiency, more ambitious EU-level target setting and greater challenge
at the State level should lead to higher targets being set for delays. There
should also be increased clarity of the trade-offs between capacity, operating
costs and future investments. This should help ensure that capacity targets are
set so as to be achievable and flexible in the long term, without being
dominated by short term traffic decreases.  
Administration
costs:
It is expected that the administration costs to the ANSPs would remain similar
to todays situation, with perhaps minor increase in effort to deliver timely
data.
Regulatory
costs: This
option is expected to have no impact on the direct regulatory costs on national
level. It is expected, however, that as a result of possible increase of
targets, the efforts needed from the NSAs on national level are also likely to
be higher. The current PRB consists of 13 members. At present, the activities
of PRB include mainly activities related to target setting (approximately 50%
of the time), performance review[173], benchmarking
and other activities. All of the activities of PRB members that focus on target
setting are currently financed from the EU budget. The option assumes creation
of a new PRB directly under the European Commission. The optimal number of PRB
members in such a new set-up would equal to 7 members[174]. If it is decided to
reduce the size of the PRB, the released funds could perhaps be redirected
towards a refinement of the performance studies. However overall it is assumed
that the nomination of the PRB members by the European Commission would not
have an impact on the EU budget as their current activities related to
performance setting are already being funded by the European Commission. 
Social
impacts: Enhanced
targets will influence changes to working practices as ANSPs seek more
flexibility in how they deliver their services, which may imply changes to
employee conditions. Combined with the proposals for unbundling, this may overall
lower job quality. This will affect all categories of staff, but may be most acute
for engineering and administrative support staff due to the linked unbundling
proposal and the fact that most of the additional cost tends to be in the
support services. It is also likely to affect older members of staff with
higher salaries, with a tendency by ANSPs to encourage early retirement. The
impacts for staff will also be impacted by labour market conditions at the
time, with engineering and administrative staff also those most likely to find
alternative employment in other industries. This contrasts to the very
specialised nature of air traffic controller jobs, where there is no potential
to transition to other industries in the same or similar role. However it
should also be noted that air traffic controllers are also least likely to be
made redundant as traffic growth requires more controllers. Thus the effect for
controllers will more likely be one of deferred growth of the job market.
Safety: Normally safety
should not be impacted by the more ambitious performance targets as safety
targets form one specific key performance area on which targets are being set.
There will undoubtedly be concerns about cost cutting leading also to cutting
corners in safety, but – provided the proposals for strengthening the NSAs are
approved – the authorities should have ample possibilities to counter such
tendencies and enforce the required safety management systems in ANSPs.

Employment: As noted for the social impacts, reduction in costs may lead
to reductions in employment or at least deferred growth of employment in the
ATM industry. To some extent this will be offset by corresponding growth in the
airline sector, but overall the impact is expected to be marginal on current
work force as traffic growth on the other hand requires additional effort,
which will compensate for at least part of the reductions.
Option 4.3 –
Allow direct nomination of the PRB by Member States, but let the PRB set
targets directly without comitology 
Description: This option
would reverse the scheme in the previous option by allowing the Member States
to nominate the PRB, but doing so under strict independence criteria. The PRB
would then directly set the targets without comitology.
The
main benefits, disbenefits and risks identified for this option are the same as
for previous option, but additionally:
Pros
·       
The
option may satisfy any Member State concerns about whether the PRB really
understands the ATM industry and create new credibility for PRB decisions
amongst the States.
·       
Member
States are able to determine the balance of ATM-industry insiders to provide
the optimum level of understanding when setting more challenging targets.
·       
The
comitology part of the target setting would be replaced by direct decisions,
saving considerable time and avoiding dilution. 
·       
As
the States would trust the PRB more and consider themselves its owners, they
might be more likely to agree to tighter targets
Cons
·       
It
is unlikely that any non-ATM experts would be nominated as each State would
have an interest to include its own ATM experts and there would not be seats
for all states – never mind for more than one expert per State.
·       
The
independence of the members would need to be overseen closely by the Commission
and strict independence requirements would need to be set on the members.
Risks
·       
For
the Commission there would be a considerable risk of letting go of the PRB. If
the option backfires, the entire performance scheme could be paralysed for
years until the legislation can be changed again. In that sense this is an
"all-or-nothing" option
In
this option the PRB members would be appointed directly by the Member States
with requirements being placed on members independence in the same manner as
happens for the European Central Bank. This would mean that de facto the PRB
nominations would tend to be end-of-career nominations for distinguished sector
experts as their return to active ATM duty outside the PRB would be restricted.
Once nominated, the PRB sets targets directly with no comitology. The
Commission has a right of veto on nomination and a right to disband the PRB if
it becomes blocked. I.e. the PRB becomes a de facto regulator[175], determining
EU targets and the consistency of State targets with them. 
The
effect of this option is to reduce the political influence of Member States and
the Commission in minimising the ambition of EU level targets and placing an
over-reliance on ANSPs in developing performance plans. As such, the PRB
becomes an economic regulator that acts as a guard to ensure an outcome in
terms of price levels and service quality offered to users that would be close
to a situation in which ANS services would be provided on a market with under
market principles.
Cost
efficiency: If it works as planned, this option would be expected to
deliver a greater cost efficiency impact than the do-nothing option, as the PRB
is likely to advise more ambitious targets at the EU level and could not be
overturned in comitology. As this option also includes a more technocratic PRU
and access to business and supporting plans (to avoid asymmetry in
information), a perspective on the feasibility of setting more ambitious
targets should also be maintained. On the other hand the option carries a
considerable risk in the sense that the PRB would then be poorly controlled if
its internal dynamics would suddenly cause it to change direction. Therefore it
is safest to assume that the benefits from this option would be similar to the
previous option, but include a much higher uncertainty factor in both
directions.
Flight
efficiency: As with the previous option, the improved transparency of
data will help improve flight efficiency and like for cost efficiency this
option may allow for more "adventurous" target setting. That said,
the option has its risks, so the result is not certain.
Capacity/delays: As for
flight efficiency.
Administration
costs:
It may be expected that with harder targets, an increased effort is required
also from the ANSPs, but the difference should be marginal.
 Regulatory
costs: Whilst the impact is not expected to have any additional impact on
the EU budget (EU covers already today all PRB costs), the focus of EU level
work will move from target setting to overseeing the functioning of the
performance system itself to step in in the case of PRB becoming incapacitated.

Environmental
impact: As
for flight efficiency the potential of this option is greater, but so are the
risks.
Social
impacts: As
for previous option.
Safety
impacts: As
for previous option.
Employment
impacts: As
for previous option.

6          
Refocusing of FABs 

Option
5.1 – Do nothing
Description: This would
retain the current situation, where FABs continue to develop slowly and miss
performance focus as no legal motivator exists.
The
main pro's, con's and risks of this option have been assessed as:
Pro's
·       
Now
that FABs are coming closer to formal establishment and if the performance
scheme continues to push for efficiency, the FABs should start to deliver
benefits under the motivation to meet performance targets.
·       
Politically
a low risk solution vis-à-vis the States and ANSPs
·       
ANSPs
in a FAB will naturally cooperate more than without them.  
·       
Minimal
new regulation required. 
·       
Minimal
disruption in those FABs that are further in development and avoids risk of FABs
to losing what focus they currently have. 
Con's
·       
FABs
continue to deliver slowly if at all.
·       
Unacceptable
to the airspace users, who see FABs as failures to provide benefits to
customers.
·       
There
is no strong incentive to move forward or address barriers.
·       
The
SES targets are not achieved and where improvements are made, they could mostly
have happened without the FAB as well.
·       
ANSPs
are deploying SESAR based on the historic State level approach. This has failed
in the past and might be repeated.
Risks
·       
Whilst
the structures now exist or can be expected to be created in the near future,
the remaining issues that risk delivery of improvements are:
o       Building
commitment on the part of FAB members
o       Lack of
prescription around the requirements
o       Finding a
robust mechanism to share best practice
o       Enforcement
of the regulations – in particular requiring FABs are indeed “implemented” 
defining what timeframe they need to be implemented in and what
"implemented" means in practical terms 
o       Funding the
implementation phase
o       Defining the
role of FABs relative to the NM – Network Manager and in SESAR
·       
If
Commission does not take action now, the entire FAB concept may slow down and
become marginalised.
The
"do nothing" is based on the assumption that the FAB concept itself
is sound and the FABs would as such be on the right track, but that they have
just not had enough time or motivation in the 2004-2013 period to implement
changes. It assumes that if the FABs were left to mature, they would start to
realise operational benefits as the increased proximity and co-operation would
lead the participants to discuss subjects such as common developments in
infrastructure or joint ventures in support services or procurement. 
This option
also assumes that the current legal framework is robust and clear enough to
force States and their ANSPs into creating closer alliances once the initial
governance arrangements have been made. Considering the limits of the current
FAB-article, this would de facto take place under the performance scheme, with
performance targets pushing the ANSPs to seek synergies wherever they can be
most effectively achieved. 
Whilst the
‘Do nothing’ approach could also be seen as the politically easiest option, it
is so for the following problematic reasons:
·       
Currently
the ANSPs operate in a secure environment as a State monopoly. They are
unlikely to voluntarily tackle the difficult political and social issues the
establishment of a fully functioning FAB will entail. In such a case FABs will
continue to display limited vision, commitment and produce limited benefit,
primarily confined to the airspace design aspect, which should already be
increasingly in the domain of the Network Manager.
·       
Despite
regulations, en-route revenues appear to cross subsidise TMA and aerodrome
operations. The financial transparency and reluctance to cross-subsidise
another States airspace, arising from FAB implementation will expose this
leaving States to fund uneconomic services. Currently overflights by foreign
carrier, form an important part of the income of a States ANSP, without causing
a corresponding amount of work. Therefore the current system is often sees as
subsidising local economy through foreign carriers. Accordingly there is an
economic imperative precluding true progression to implementation of FABs.
·       
Member
States perceptions around issues of sovereignty, national security and
liability are currently not questioned.
These risks
have been well recognised in the airline views, e.g. AEA position, that FABs
should be based on “the needs of airspace users and not on national borders”.
Indeed the airlines are supportive of the concept of FABs but frustrated by the
lack of progress in them.
Option
5.2 – Create more prescriptive and enforceable targets/criteria for FABs 
Description: This would
retain the current FAB model, but revise the criteria contained in Reg
550/2004, Art 9a, by making them performance focused and more prescriptive.
The
main pro's, con's and risks of this option have been assessed as:
Pro's
·       
FABs
can achieve significant benefits without focusing on ACC consolidation. They
simply need more focus and direction. 
·       
Reliance
on targets alone is not sufficient. The plans underpinning the targeted
performance need to be subject to scrutiny and on-going monitoring. 
·       
Keeps
existing FABs in place and refocuses them using an evolutionary approach, as
opposed to revolution.
·       
Relatively
simple to implement.
·       
Requires
FAB business planning to be much more robust by setting out clear criteria on
process, content and evidence (i.e. hard plans rather than loose ambitions).
·       
Addresses
the legal vacuum that currently exists on what FABs are meant to achieve and
look like and when.
Con's
·       
Until
FABs are established as operating entities performance measurement will be
problematic and somewhat academic, being a simple amalgam of separate entities
rather than a FAB.
·       
FABs
are not focused on improving performance, but on complying with the formal
requirements of a FAB. Changing the mind-set to establish urgency will be a
challenge.
·       
Needs
to be supported with a robust and effective enforcement mechanism to be
effective.
·       
Most
importantly this option duplicates the performance scheme, or alternatively
replaces the FABs with the performance scheme. 
Risks
·       
There
is a risk of political opposition. States are finding ways to comply with the
current rules and any new conditions would be seen as doing away with those
efforts.
·       
May
lead the Commission deep into micro-managing FAB developments.
The
current list of FAB criteria in Art 9a of Regulation 550/2004 is problematic in
two ways. Firstly it does not give the Commission the gatekeeper role to
approve FABs or to send them back for rework. Secondly the criteria for FABs
are very vague and can be debated by skilled lawyers to the extent of making
infringement cases difficult to stick. A solution to this could be to accept
the FABs for the time as they are, but setting a second deadline by which they
need to comply with a much stricter and better defined set of performance based
criteria. This would mean setting targets for the FABs, requiring them to
present detailed implementation plans and business cases and organising regular
and detailed review and approval process for them. The endorsement of these
plans would need to be supported by not only the PRB, but also by the Network
Manager for issues linked to Network operations and the SESAR Deployment
manager.
A
major feature of these plans would also be their standardised nature. Currently
the plans and cost benefit analyses that have been made are not comparable with
each other and in any case, without external scrutiny, they tend to be overly
optimistic. A good example are the differences in NPV's of the FAB reports that
were submitted under Regulation 176/2011. Considering all FABs should benefit
from roughly similar co-operation gains, the benefits and their distribution
varies wildly:
Figure V-7: FAB reports on CBA benefits
This
level of optimism makes it also difficult to make a comparison with the
baseline (above plans are formally what the baseline should be). As the figures
above are for the most optimistic "do nothing" scenario, a cautious
abatement of 25% has been performed on them for comparison purposes.
Cost
efficiency: If tighter criteria were set down for FABs, it would make
achievement of the stated targets more likely, even if not certain. The FABs
will be held more accountable and the most unrealistic plans exposed as such.
It is probably realistic to assume these factors will roughly balance each
other out and the 25% abatement applied to the above-mentioned NPV of the
original plans is reversed. This means that the NPV attributable to cost
efficiency under this option is € 370 million, i.e. an improvement in NPV
of approximately € 100million with this option compared to "do
nothing", which translates to around € 10 million per year in
benefits
Flight
efficiency and environmental cost: the more stringent criteria would drive
also achievement of flight efficiency gains, so a positive impact would be a
natural expectations. However in the case of flight efficiency this impact is
somewhat balanced by the fact that route design is a service best done at
network level and hence it is increasingly covered by the Network Manager. The
occurring benefit may therefore need to be at least partially attributed to the
Network Manager.
Capacities/delays:
all
FAB plans deal with capacity, although it is not a major problem for all FAB'.
It is reasonable to assume that those FABs that currently have delay issues
will incrementally address them in the FABs, although as far as there are still
separate service providers the decisions to procure new equipment or hire new
controllers will be made at national ANSPs level. If the targets can be defined
well, this could be alleviated to some extent by forcing the FABs to be more
explicit about how delays are addressed and to plan also the interfaces with
their FAB neighbours.
Administration
costs: the
more prescriptive FAB conditions will mean that FABs would need to put more
effort into planning and complying with the new targets. This in turn brings an
inevitable increase in administration costs.
Regulatory
costs:
If the FAB development leads to synergies being found e.g. though common
provision of services, this will lead to changes in working considtions (e.g.
working abroad part of the time) and to reductions in employment as several ANSPs
are served by a shared resource. As with the performance targets this
development will most likely affect engineering and administrative support
staff, whereas the situation of controllers will stay stable.
Safety:
There
would most likely be no impact on safety, unless deeper ANSP co-operation leads
to best practises being adopted by more ANSPs and hence better safety.
Employment:
As
noted for social costs, some downward pressure especially on engineering and
administrative support staff is likely to happen. This option alone would
however have a fairly limited impact compared to others and the redundancies
have been estimated to remain at roughly 400 jobs, as the basic structures of
FABs would in most cases probably remain as they are.
Option
5.3 – Creation of a more flexible and performance driven FAB-model 
Description: This option
would change the FAB concept towards more flexible constellations, where the
FAB is seen primarily as a tool for performance and its success measured
through the attainment of the general performance targets.
The
main pro's, con's and risks of this option have been assessed as:
Pro's
·       
Overcomes
the issue that five of the FABs are bi-lateral arrangements unlikely to achieve
anything that could not have been done by one-to-one collaboration and the
plans of the three larger FABs showing little evidence that they will deliver
significant benefits.
·       
Consistent
with the philosophy that the performance scheme sets the objectives and targets
to be reached, but after that ANSPs are set free to achieve those targets as
they best see fit and the EU intervenes only if targets are not met
·       
Consistent
with the philosophy of the Network Manager having a network view and
coordinating airspace from that perspective.
·       
Promotes
the idea that FABs are not just about airspace and nearest neighbour
collaborations but fundamentally a means to an end (performance).
·       
Encourages
FABs to develop performance driven partnerships wherever they are located.
·       
Follows
existing trends in ATM system collaboration such as COOPANS. 
·       
Saving
of the resources expended on the development of FABs, where the benefits would
be marginal or negative.
Con's.
·       
Performance
scheme monitoring needs strengthening and stronger line required on
non-performance – otherwise nothing changes.
·       
There
is a risk that the option could stall FABs or at least the FAB development
would become less transparent as co-operation arrangements would exist at
multiple levels and directions. 
·       
FABs
provide the potential for at least partial rationalisation and to realise this
benefit of the FAB structure we should be careful not to undermine it. Whilst
the FABs would not disappear under this option, they would become more complex
and less easily managed interfaces for the Network Manager, SESAR, EU and Airlines.

Risks
·       
Whilst
the option brings the possibility of enhanced co-operation and focusing of FABs
on performance instead of formal compliance, it also creates a risk of diluting
the FABs and losing whatever benefits have already been achieved in the
traditional rigid FABs.
This
option reformulates the FAB concept in order to focus it more strongly on
creating additional performance and away from the idea of FAB as a political
entity. Already in SES II the FABs were removed from the airspace regulation in
the realisation that airspace configuration aspects are best dealt with at
network level under the auspices of the Network Manager, and FABs should be
seen as tools for improving performance. In that sense it is immaterial what
their form is as long as they provide the necessary benefits to comply with the
performance targets.
The
basic idea of the performance scheme has been that it sets the objectives and
leaves the ANSPs free to define the solutions. Thus the precise format of FABs
would be defined in their CBA's, when deciding which forms of co-operation
bring best value. Consequently it is also conceivable that some areas would be
left outside the FAB co-operation if they do not come with the necessary
performance improvements. This would in particular act against the recent trend
where updates to the FABEC and Danish-Swedish FABs CBA's have seen their
anticipated benefits revised substantially downwards.
It
should also be noted that this option has a strong link with the option to
extend the Network managers role as in that case all those functions, where the
scale or level of action is important for the amount of benefits, would be
co-ordinated at the highest level through the Network Manager.
Cost
efficiency: Under the multi-directional FABs option it could be expected
that the FABs focus on performance scheme. This may entail some initial costs
as FAB plans are revised, but overall even a conservative estimate would
indicate that FABs should be more likely to achieve at least the level of
cost-efficiency as is estimated for the "prescriptive targets"
option. As the prescriptive option hinges on top-down micro-management of
business through a relatively rigid legal text and the "flexible FABs"
option allows for quick adaptations and improvements as situations change, it
should be safe to assume that the level of benefits will in real life exceed
that coming from the prescriptive option. However the exact amount would depend
rather on the performance scheme than the FABs option as the FAB is just a
means to an end.
Flight
and environmental efficiency: It is likely that a "flexible
FAB" option will have some positive effect on this area, although most of
the benefit will come from improved co-operation at a higher level under the
auspices of the Network Manager.
Capacity/delays:
The
impact on capacity would probably be similar to the one in the prescriptive
scenario. Through the FAB-cooperation the ANSPs would have more means to employ
for improving capacity and the would also be better able to co-ordinate
capacity efforts with their neighbours, but the two options do not differ in
this sense, so the impact would most likely be identical. 
Administration
costs: Compared to the other options, the
administration costs are most certainly similar. In each option some work has
to be undertaken to set up a FAB and only the content of the FAB plans will be
different as it is driven by different background motivators. The
regulatory costs at EU level in this option are likely to be slightly lower
than in other options, as oversight of the FAB initiatives would be primarily
done through the performance scheme. That said, support for FABs would probably
be needed just as much as before so the difference in the end will be
insignificant.
Social
impacts:
As in the option for more prescriptive FAB targets, the efficiency measures and
joining of forces between ANSPs is likely to lead to redundancies and changes
in working conditions as the same staff members are used to serve several ANSPs
and the technological infrastructure may undergo harmonisation.
Safety:
No
safety impact is expected.
 Employment:
This option
would lead to some limited redundancies (estimated up to 400 redundancies) and
changes in working conditions over time as FABs would seek synergies by
combining their functions..
Option
5.4 – Top-down approach with a new entity created from the Network Manager and
PRB to design service provision
Description: This option
would be the most radical FAB-option as it would make FAB establishment and
design a decision of a new EU-level entity. Only a limited number of FABs would
remain and the concessions to run them would be tendered out regularly for
fixed period contracts.
The
main pro's and con's of this option are expected to be:
Pro's
·       
Provides
the incentive missing to encourage pursuit of service excellence and
efficiency.
·       
Transfers
performance risk to service providers and gives airlines certainty on pricing.
·       
Much
faster rationalization of service provision and consequent reduction in costs
and user charges.
·       
Removes
the issues of integrated approach to procedures and systems deployment across
multiple States, something essential for success of SESAR.
·       
Optimised
airspace design based on traffic flows.
·       
Promises
highest possible defragmentation benefits.
·       
Seen
as an opportunity by the more commercially focused ANSPs.
·       
All
ANSPs can have the opportunity for participation in ownership of the operating
entity through preferential shareholding.
Con's
·       
Such
a radical change would be politically sensitive. 
·       
Would
require extensive preparatory work to define the option.
·       
Success
would depend on the quality of regulation.
·       
Over
time the system could lead to an oligopoly of ANSPs (typically service
provision in lower airspace is less profitable so only those that receive
concession would survive in the long term), so anti-monopoly rules would need
to be enforced firmly
·       
Will
take a long time to implement fully (10-20 years)
Risks
·       
Risk
of political stalemate is very high
·       
The
success hinges on the ability of a single entity to design the entire European
ATM landscape, instead of allowing multiple sources to compete for best ideas.
If the single design entity makes a mistake, the resulting damages could be
much larger than today when a single ANSP makes design errors.
·       
The
most likely contenders for concessions (the 5-6 biggest ANSPs) are by far not
the most efficient service providers in the EU. Therefore a high risk exists
that solutions would be realised using the "lowest common
denominator".
In this
option the concept of FABs as a bottom-up construction is replaced with a New
European Entity which would have responsibility for organization of EU ATS
provision and regulation. This entity would be a combination of the economic
and analytic expertise of the PRB, the network expertise of the Network
Manager, the safety oversight expertise of EASA and, critically, a new body of
expertise in concession management in the transport sector. Characteristics of
the system could be: 
·       
EU
airspace above a certain minimum flight level could be divided into 4-6
contestable service delivery zones (concessions) based on an optimal
configuration.
·       
A
tender process would be held amongst certified providers for 10-15 year
concessions, subject to meeting defined service specification and price
criteria and compliance with defined investment plan. 
·       
States
provided with right to take control of national airspace where there is a
defined threat to national security.
·       
Potentially
the concession could have a pricing structure in which price is fixed with risk
and reward transferred to operating entity. There would be a significant motivation
to provide services below the target price to make profits.
·       
Operation,
maintenance and development of facilities and infrastructure would remain
subject to independent service and economic regulation by the new entity.
·       
Alternative
would be to split the structure into infrastructure operating organisations and
service organisations 
Cost
efficiency: There would be substantial costs to the ANSPs and to the EC,
EASA, Network Manager, PRB and other agencies in re-organising a ‘top down’
approach, but also potentially a realisation of large cost efficiency benefits.
Under this scenario a concession arrangement would start an immediate and
extensive reorganisation of en-route service delivery. Of the potential savings
identified in the 2006 Fragmentation Study, this approach would have the
potential to realise savings towards the top end of the range in the area of
ACC's by forcing consolidation. Further this approach would facilitate
realisation of the other benefits identified in the study, especially in the
area of harmonised infrastructure and procurement.  
The “top
down” option would have the highest potential for realisation of the cost
efficiency benefits. Under this scenario a concession arrangement could
potentially derive rapid and extensive reorganisation of en-route service delivery.
To quantify the impact, the delta between Merger versus the Alliance scenarios
of the DK-SW FAB in the original CBA was assessed (since revised downward for
the Alliance option). This is selected as it is the most definitive of the FAB
business cases and one that clearly elaborates cost efficiency (as opposed to
flight efficiency) benefits. Based on this approach, the Merger scenario drives
an improvement in NPV of 246%. This is a significant increase, but needs to be
seen in the context of the DK-SW FAB “Merger” scenario, a scenario which
represents significant optimisation based on rationalisation of service
delivery and procedures, similar to what may be expected under this option.
Using this approach, the impact on the NPV for cost efficiency for all FABs
under this option is € 683 million per annum. When compared to the
potential savings of € 880 million to € 1400 million in annualised
ANSP operating costs identified in the 2006 Fragmentation Study, the estimated
savings are significantly below the lower end of this range, indicating that
this may be a conservative estimate.
Figure V-8: Summary of fragmentation costs in
the 2006 PRC fragmentation study
Flight
Efficiency/Environmental impact: According to the study and interviews
commissioned, under the “top down” approach there will be concern that service
providers will sacrifice flight efficiency to realise commercial returns. The
extent to which this occurs is dependent on the quality of regulation and the
structures provided for determining, monitoring and incentivising performance
against this dimension.  There is a body of experience of how successfully
safety, efficiency, reliability and other dimensions in the transport sector can
be addressed under a concession model. To the extent that flight efficiency
targets are required to be met under the terms of operating licenses,
improvements can be expected in this area and may be assumed to be consistent
with targets established under the Performance Scheme.
Capacity/delays:
As
for flight efficiency/environment, there exists a concern that capacity would
be sacrificed for the benefit of cost and profits. However if avoidance of
delay can be made a central customer requirement, with financial penalties for
failing to meet the requirement the impact could be quite positive. The
difficulty lies in devising a balance of indicators that avoids any unplanned
consequences. 
Administration
costs: There
would be a rise in administration costs for contract and project management,
but considering the likely reduction in number of ANSPs this would remain
minimal.
Regulatory
costs:
Creation of a new centralised entity will have a major impact on the regulatory
costs. The new entity would have to run the day to day operation of airspace
design and possibly also infrastructure planning, procurement and managing.
These day to day operations are expected to have an impact on costs. However,
before such a new entity is able to run the day to day operations, an
additional task of completely redesigning the airspace in Europe would have to
be done. Both the task of redesigning the airspace as well as the day to day
operations are expected to result in a considerable additional cost, that would
have to be recovered through route charges in the same manner as the Network
Managers cost is recovered today. It is difficult to estimate these additional
costs, but at the minimum a staff of 50-100 persons would need to be recruited,
which would mean an additional cost of € 0.8-1.6 million if the average
costs of employment of one person at an European NSA is used (€ 162 000 per
year[176]). It should of
course be noted that as this staff would replace currently existing staff in 27
Member States, the overall cost would diminish. 
Social
impacts: There
would be very significant social impacts as staff would be made redundant and
the majority of ANSPs would either cease to exist or be merged into bigger
entities. This may also imply changes to working conditions and lower job quality
in all categories of staff, but most of all for engineering and administrative
support staff.
Safety:
There
should be no impact on safety as the same safety provisions would still apply
as today.
Employment:
Reduction
in staff numbers in support, administrative and managerial positions is highly
likely. On the other hand the cost efficiency improvement means lower costs for
airlines, with a positive impact on employment levels in the airline industry
and in the wider economy. This has been estimated at around +500 jobs in 2020 possibly
increasing to +3,000 jobs in 2030.

7          
Role of the network manager

Option 6.1 –
Do nothing
Description: In this
option the Network Manager would continue to operate in its initial operating
scope and the Member States would continue to be part of its governance
The
advantages and disadvantages of this option have been assessed as:
Pro's
·       
It
is early days for the Network Manager, which may need some time for current
functions/processes to mature and relationship with other stakeholders to be
shaped.
·       
Consistent
with the clear majority view from the stakeholder survey.
Con's
·       
The
Network Manager is not well integrated into the planning and investment
decisions of ANSPs (to provide reliability of network performance planning).
·       
The
Network Manager may need additional support to position itself as a strategic
partner to ANSPs and FAB for optimum network performance.
·       
The
initial set of functions forms only a fragment. A more consistent formulation
of the functions performed would help deliver results
Risks
·       
When
it was created, the Network manager was understood to include only an initial
set of functions and from the start it was assumed that this set would be
completed once SESAR is nearing delivery and the Network Manager is properly established.
If this opportunity is not used, the development of SESAR may be delayed.
It
could be argued that nothing as such is wrong with the Network manager. It has
performed in its initial remit as planned. On the other hand this initial remit
was always understood to be just that and only a warm-up in preparation of the
SESAR deliverables, which require co-ordinated deployment at network level.
Option 6.2 –
Move operational Governance to industry and simplify EU and State governance of
strategic matters  
Description: In this
option a two-tier governance model would be implemented, so that the ANSP's and
airspace users are prominent at operational level and Member States at
strategic level.
The
advantages and disadvantages of this option have been assessed as:
Pro's
·       
It
addresses the lack of influence users are able to exert. 
·       
Provides
a better vehicle for the Network Manager to be truly in a position to manage
the performance of the network. Currently there is a dependency on ANSPs and FABs
for delivering network performance and an assumption that these parties have
the same priorities.
·       
Greater
user influence on decision making – users determine the cost/service trade off.
·       
Addresses
the lack of capacity to require changes given the already existing regulatory
requirement to employ "cooperative decision making".
·       
Expanded
operational scope needs a different governance model, meeting more frequently.
Con's
·       
The
retention of right of States to not comply is a major limitation on Network
Manager effectiveness
·       
The
Network Manager relies on ANSPs/FABs to deliver network performance, but this
option could make them feel disempowered and consequently less commitment to
supporting Network Manager plans
Risks
User
priorities may not align with SES or SESAR priorities. The users (who pay for
the entire system) may opt for delay to achieve short term savings. Their view
is generally short term compared to ANSP/FAB planning which is long term, as
evidenced in past with IATA demanding ANSP make cost savings rather than
increase unit rates when traffic is in decline. Due to the nature of ATM as an
infrastructure industry with high fixed costs, a long term perspective is
required if the industry is to be modernised.
Cost
efficiency: Greater user influence should expose the Network performance
to further scrutiny, and there is some evidence from the SES2+ study and the
participation in the Network management budget task force that airspace user's
involvement in the NM Board is directing this.  Given that service provision decisions
remain in the hands of ANSPs this is likely to have limited impact,
particularly as States retain the right to not comply with Network Management
Board decisions. This limits the Network manager capacity to drive improved
cost effectiveness. Until and unless this option addresses this issue, the net
benefit in terms of cost efficiency is marginal at best. Thus the cost of
service, beyond the Network manager direct costs, is not something the Network
Manager controls. Assumption is marginally positive benefit.
Flight/environmental
efficiency: Potentially user priorities are better
reflected in the Network Operations Plan and to the extent that flight
efficiency is a priority compared to Network Manager costs and delays, there
will be more emphasis on improvements. However the overall impact is likely to
be marginal as the fundamental issue of dependence on States to comply and ANSP
and national military organisations to implement remains. Assumption is marginally
positive benefit.
Capacity/delays:
Whilst
the costs of delays are recognised as a significant economic cost, there may be
different priorities held by users in the detail of how delays are dealt with
and what their importance is considered to be vis-à-vis cost. There are several
trade-offs that can be made here: Delays vs. cost, The importance of delays per
delayed flight vs. average delay per flight, Peak rather than average delays
etc. More operational governance will likely reflect better airspace user
priorities. However, the impact is likely to be marginal as the solution to
capacity issues requires investment by ANSP which remains beyond the capacity
of the NM to control under this option. Assumption is marginally positive
benefit.
Administration
costs: Minor
if any – this is very similar to the current model, just a change in the
composition
Regulatory
costs: Since
the regulatory environment is largely unchanged, the costs should stay
unchanged as well.
Social
impacts: None.
Safety: No impact. 
Employment:
No
impact.
Option 6.3 –
Create a joint undertaking of the industry to operate the Network Manager
 
Description: This option
is a further development of the previous model so that the Network Manager
would be run like any other ANSP, but under an industry joint undertaking
model.
The
advantages and disadvantages of this option have been assessed as:
Pro's
·       
Greater
user influence on decision making – users determine the cost/service trade off.
·       
Network
Manager maintains neutrality needed for providing the centralised services.
·       
A
more strategic partnership between FABs and Network Manager may reduce
duplications.
·       
May
also help assist inter and intra-FAB coordination.
·       
The
engagement of all stakeholders in coordinating the investment strategies for
the Network and implementing operating concepts for the Network on a regional
basis. 
·       
The
mutual dependency of the Network Manager initiative and SESAR is recognised and
the role of both is enhanced to ensure achievement of the shared objectives of
these key elements of SES, as defined in the European ATM Master Plan and the
SES regulations.
Con's
·       
The
State and ANSP stakeholders need to be prepared to work through the FAB
structure. They may perceive this as high risk.
Risks
·       
User
priorities may not align with SES or SESAR priorities. The users (who pay for
the entire system) may opt for delay to achieve short term savings. Their view
is generally short term compared to ANSP/FAB planning which is long term, as
evidenced in past with IATA demanding ANSP make cost savings rather than
increase unit rates when traffic is in decline. Due to the nature of ATM as an
infrastructure industry with high fixed costs, a long term perspective is
required if the industry is to be modernised.
This
option covers the possibility of an industry joint undertaking operating the
Network Manager, with political and performance steering by the Commission and
Single Sky Committee and safety oversight by EASA as today. This would lead to
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.  It is assumed the Network Manager JU would be a similar
concept as the SESAR JU. Within the new Network Manager the governance would be
organised on two layers; strategic and operational
Cost
efficiency: This option would give the ANSPs and users greater stake in
the performance of the Network Manager thus potentially leading to improved
network performance which would in turn drive reductions in the cost of
services. It may also provide the potential for opening aspects of the Network
Manager services and supply to greater competition thus further lowering the
costs. 
The
SESAR projects relevant to demand capacity balancing, which are an influential
factor in cost efficiency, would have a much improved level of support under
this option. However, the benefits are difficult to quantify and the reality
remains that the Network Manger itself is only one player in the network so the
impact could be assessed as marginally positive.
Flight/environmental
efficiency: This option may see some incremental
improvements in route design which will exceed the airspace improvements
currently planned by the States by better reflecting airspace user priorities
and creating greater separation of the political and operational dimensions in
determining Network Manager priorities. However the keys will remain
involvement of the military along with the increased identification of ANSPs
with (and thus support for) the Network Manager function. Therefore some
improved performance could be expected under this option, but any improvement
is minor relative to the overall target.
Capacity/delays:
As
with the previous option, the impacts are likely to be marginal. The solutions
to capacity issues require investment by the ANSPs, which remains beyond the
Network Managers remit. Some positive effect can however be achieved through
improvements in the enforcement of flow management measures and the greater
focus on this and the flight efficiency target as well as improved interaction
between the Network Manager, ANSPs and users could reasonably be expected to
realise the 2014 delay target of 0.5 minutes per flight. 
Administration
costs: No
impact.
Regulatory
costs: Costs
of administering the new JU can be assumed to double the cost currently
occurred for the Network management Board structure simply on the basis that to
be effective this new body needs to meet at least bi-monthly which is twice the
frequency of the current board and it also needs to go deeper in managing the
Network Managers work.
Social
impacts: No
change.
Safety: No change.
Employment:
No
change.
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
Description: This model
would combine either option 6.2 or 6.3 with an enlarged scope of the Network
manager, so that new centralised services stemming from SESAR would be
integrated in it
The
advantages and disadvantages of this option have been assessed as:
Pro's
·       
Subcontracted
development and operation of Network Manager will function as a sweetener for
the more commercially minded ANSPs. i.e. more along the lines of the current EAD
service that is subcontracted to GroupEAD.
·       
Establishes
a semi-commercial model as an option for provision of ATM support services.
·       
May
enable improvements in services that are currently difficult to influence such
as MET provision. E.g. by making a single MET provider, States would be under
considerable pressure to avoid duplicating it through their national costs.
·       
ANSP
given direct management oversight.
·       
Brings
commercial disciplines to provision of Network Manager services.
·       
Likely
to reduce costs of service.
·       
Optimal
solution for harmonisation of systems and facilitating alignment with SESAR.
Con's
·       
Many
Member States would be likely to oppose a commercial model.
Risks
·       
Political
risk
This
option also requires a governance split as described in either Option 2 (User
dominated Network Management Board) or Option 3 (Network Manager JU) as the
service would be increasingly of the nature normally provided by national ANSPs.
A key feature of this option is the concept of centralised services. This is a
developing idea where certain database driven ANS/ATM services may be
centralised with the provision of these services exercised at network level
after unbundling at national level and tendering to industry through the
Network manager, which would most likely own and develop the technical
infrastructure required. The Eurocontrol submission to the consultation
describes that “Up to ten centralised services should be established by the
Organisation in the period 2013-2017”. The emphasis of centralised services is
to avoid potential duplication and lower the costs of achieving the SES, with
particular reference to SESAR deployments. 
The
concept of more centralised services for the network manager is built on the
success of initiatives such as the European AIS Database (EAD[177]) and, more recently,
the PENS network service[178]. The
objective of any centralised service must be to meet user's requirements in an
efficient way, avoiding duplication of the service across the user base.
Centralised services are also driven by an imperative to collaborate, and may
show some or all of the following characteristics:
·       
require
information to be shared with a high degree of trust (accuracy, integrity,
confidentiality and security);
·       
provide
services that may be complex and therefore difficult to fulfil;
·       
meet
common needs of users without generating a ‘superset’ of requirements;
·       
provide
a common view of information, typically through a single point of access;
·       
provide
de-facto harmonisation of information and its formats and processes;
·       
support
open source access to enable users or other suppliers to innovate value-added
services (without duplicating costs to stakeholders).
·       
Allow
for deploying SESAR concepts from a blank sheet with minimal cost.
It
would be reasonable to expect a compelling business case for a centralised
service, which will not only account for cost-benefit analyses but also
consider risks and benefits to service quality.  The ideas and initial
investigations for a centralised service are likely to arise through existing
bodies, such as Eurocontrol, FABs, other ANSP Alliances and, in the future
increasingly the SESAR Deployment Manager.
Part
of the business case would need to be to determine the optimum organisational
owner for the service, and the Network Manager is likely to be the likely
candidate; as it already has the required governance, expertise (ATM and
information services), legal base and technical infrastructure. This does not
mean, however, that the Network Manager would automatically also be the
supplier of the service, but it may take a service management role. 
The
service management role would include specifying the requirements, contracting
the development/operation of the service, managing performance and subjecting
the service to periodic market competition to ensure cost efficiency. The
winning consortium’s profile, contract duration and ownership of assets are
important considerations to reduce risks and protect the interests of the
service’s clients in case of supplier change or default. Industry, including
ANSPs, would be potential suppliers, but would be doing this through an
established provider such as the Network Manager and be subject to market
pressures.
Cost
efficiency: This option is likely to reduce costs of service through the
adoption of competition for supply and the application of commercial
disciplines to management of the functions (assuming these are adopted under
options 2 or 3 as Eurocontrol is not currently managed on this basis). Most
importantly this option would lead to a major reduction of unnecessary duplication
at Member State level.
The
precise benefits flowing from this depend on the nature of the services
provided, and Eurocontrol has made some initial estimates that the benefits
could be in the region € 150-200 million over a 10 year period. If
meteorological forecasting were to be included in this, the benefits could
readily be up to 10 times this amount. Further benefits may be accrued from
execution of completely new SESAR related services as some centralised
services may be a more efficient way of achieving what is a new cost to the
current determined unit rate. Overall it is likely that if well-defined and
managed, these services could make a positive contribution to achieving the
cost efficiency targets proposed for RP2. 
Flight/environmental
efficiency: This option would be expected to impact flight
efficiency, particularly as centralised design of airspace is one of these
functions. This option would see greater consistency in airspace design and operation
which would be reflected in improved flight efficiency. A centralised approach
including centralised provision of core services relating to operation of the
network is the most likely means to secure the upper range of the preliminary
RP2 flight efficiency targets. However, there are a number of provisos, not
least of which is the extent to which the military can be engaged. 
Capacity/delays:
The
option would have considerably higher delivery potential than the other
options, as it could introduce improvements in flow management via
introduction of effective 4D trajectory management. It is one of the key SESAR
concepts and would maximise in particular runway capacity by introducing
time-based operations from gate-to-gate.
Administration
costs: No
additional costs compared to do-nothing scenario.
Regulatory
costs: Costs
will not change noticeably, but some effort may be shifted internally.
Social
impacts: None
expected in the Network Manager, but the practise of outsourcing through
time-limited concessions will lead to regular changes in job content and
security.
Safety: None
expected.
Employment:
No
reduction in overall numbers is expected, but shifts from one provider to
another may occur as concessions change. 

8          
Micro-economic impact of scenarios

The
table below sums up the way in which the choice of individual options supports
each scenarios total improvements. As explained in section 6.2.1, the effect of
option group 3 (ineffective role of NSAs) have been cancelled out, as they are
already factored into the overall performance scheme benefits. Therefore they
are presented below, but in brackets. The "+" signs indicate benefits
that are most likely to contribute positively, but that are too minor, or
uncertain to be assessed precisely, so they are shown only as indications of
direction, strengthening the other benefits. Due to uncertainties involved with
future pay-scales, actual need of personnel and various external factors, a 20%
uncertainty factor has been applied to administrative costs.
Figure
V-9: Comparison of policy scenarios for Scenario 2 (Risk optimised scenario) 
   || Cost-efficiency || Flight-efficiency || Capacity/delays || Administrative costs 
 Support services || + || 0 || 0 || 0 
 (NSA independence) || <€ 75 M p.a || + || + || -€ 6.5 M p.a (saved) 
 User focus || ++ || ++ || ++ || € 15 M p.a 
 Performance scheme || € 240 M p.a. || € 1.6 Bn p.a. || €  120 M p.a. || 0 
 FABs || €  10 M p.a. || + || + || 0 
 Network Manager || + || + || + || €  0.16 M p.a. 
 Total: || >€ 250 M p.a. || >€ 1.6 Bn p.a. || >€ 120 M p.a. || € -7.9-9.7 M p.a. 
Figure
V-10: Comparison of policy scenarios for Scenario 3 (Performance optimised
scenario) 
   || Cost-efficiency || Flight-efficiency || Capacity/delays || Administrative costs 
 Support services || ~€ 450 M p.a || 0 || 0 || € 4.5 M p.a 
 (NSA independence) || ~€ 150 M p.a || + || ++ || - € 4.5 M p.a (saved) 
 User focus || ++ || ++ || ++ || € 15 M p.a 
 Performance scheme || €  300 M p.a. || >€ 2 Bn p.a. || €  150 M p.a. || 0 
 FABs || €  10 M p.a. || + || + || 0 
 Network Manager || €  15-20 M p.a. || ++ || ++ || €  0.32 M p.a. 
 Total: || >€ 780M p.a. || >€ 2 Bn p.a. || >€ 150 M p.a. || €  -13.8-16.8 M p.a. 

9          
Impact of scenarios on employment

As regards employment in
the ANSP's, a reduction in costs will lead to fewer employed staff in the ATM
industry. Based on the PRB’s indicative ranges of cost reduction, the IA
support  study estimated that the different scenarios could lead to the magnitude
and type of reductions of staff described below. It has to be noted that the
figures contain numerous uncertainties as it is impossible to predict, what
strategies different service providers will choose to reduce costs and also the
effect of oncoming technology shift is difficult to predict before the
technology has matured.
The estimate is based on
the fact that a high percentage of ATM service provision costs is actually
staff costs. Hence a real reduction in costs will most likely require cuts in
staff costs and lead to fewer employed staff in the ATM industry. Based on the
PRB’s indicative ranges of cost reduction, it has been estimated how the
different scenarios could lead to reductions in staff over the period
2015-2019, based on 46300 staff in 2014:
To
do this, the consultants have applied the annual rate of cost decreases to the
PRB scenarios to an estimate of staff numbers for the period 2015-2019:
·     
Staff
numbers were estimated by extrapolating the trend in total staff numbers from
2010[179] to 2014. The
2010 figure for EU States was 45165 and the trend from 2007 – 2010 was a slight
increase of 0.63% per year. This gave an estimate of 46300 staff in 2014.
·     
The
rates of decrease for each scenario was as defined by the PRB’s RP2
consultation[180], namely "minimum"
= -0.2%, ‘stretch’ = -1.1%, "accelerated stretch by 2030" = -1.7% and
"accelerated stretch by 2025" = -4%.
·     
The
"accelerated stretch" scenario assumes also the iclusion of results
from a full structural reform of support services as per option 1.3.
·     
It
was also assumed that there will be more job losses at the lower end of the
salary scale, driven by changes in technology. This will impact the roles of
air traffic control assistants and maintenance engineers more strongly than
other staff. It is therefore estimated that there may be more job-losses in
this category, which is also towards the lower ends of ANSP salary scales. To
account for this we have assumed that job losses could be an additional 10%
higher than otherwise predicted by the cost-reduction rates of the scenarios.
The resulting estimates of reductions in staff were:
Figure V-11: Job losses vis-à-vis PRBs RP2
consultation
 Scenario || Staff reduction 
 Minimum || 500 
 Stretch || 2700 
 Accelerated stretch by 2030 || 4200 
 Accelerated stretch by 2025 || 9400 
Equating the PRB RP2 scenarios to the packages
of options discussed in this report results in an overall estimate of: 
·     
‘do
nothing’ = ‘minimum’ = 500
·     
‘risk
optimised = average of ‘stretch’ and ‘accelerated stretch by 2030’ = 3450[181]
·     
‘performance
optimised’ = ‘accelerated stretch by 2025 = 9400
Certain
categories of staff will be affected more than others, with the impact
according to ACE categories likely to be as follows:
·              
"Controllers
in Ops – Area Control Centres (i.e. en-route)". Currently these make
up for 16% of total staff. According to the PRU Costs of Fragmentation study[182], new
technology and operational improvements should contribute to raising controller
productivity, as would moderate changes to shift hours and patterns. The
challenge for ANSPs is to manage controller numbers to forecast demand, so the
numbers may not decrease substantially, but may even increase with traffic
growth.
·              
"Controllers
in Ops - Approach and Tower". Greater use of Aerodrome Flight
Information Service (AFIS) instead of control towers and, in future, Remote Operated
Towers could reduce controlelr requirements at smaller towers.
·              
"Cotrollers
– non-operational". Currently 4% of the total, it is likely that
these numbers will reduce.
·              
"Abinitio", "Ops
support – non-controller" and "Undertaking On-The-Job-Training".
These trainees are currently 8% of the total and will change in proportion to
any reduction or increase in the number of ATCOs.
·              
"ATC
Assistants". These positions are not needed in many current and
certainly future Area Control Centres, so the current total of 2522 (4%) is
likely to decrease significantly.
·              
"ATS
Electronics Personnel (ATSEP) – maintenance". Currently at
20% of total staff, with more ATSEPs than controllers. The ratio of the more
efficient providers is towards 1:2 ATSEP to ATCO, although this will depend on
a number of factors. With rationalisation of maintenance through initiatives
such as FABs, SESAR or unbundling, these are likely to decrease.
·              
"ATSEP
- planning and programme". At 2674 or 5% of the total, when compared
to ATCO numbers these appear high, but with current modernisation programmes
they may remain at this level unless more can be done collaboratively in FABs
or more centrally.
·              
"Admin". At 8740
staff or 15% of the total it is likely that these positions will be reduced,
particularly with FABs enabling consolidation of support services.
·              
"Support
services". Unbundling and consequent rationalisation of ancillary
services could lead to particular reductions in staff numbers.
·              
"Other".
It is not possible to assess how this category might be affected, which is 6%
of the total.
However,
the lower costs and greater efficiency of aviation stemming from achievement of
the SES targets should stimulate competiveness and increase employment in
Europe. Therefore, as concluded in chapter 6, the overall impact of SES2+
should be positive as constraints to growth are removed, even if the transition
phase will be painful for those affected.
ANNEX
VI
Description of performance scheme and monitoring mechanisms
The performance
scheme of the Single European Sky is based on Article 11 of Regulation (EC)
549/2004 as amended by Regulation (EU) 1070/2009. It is ultimately linked to
the common charging scheme of Article 14 and 15 of Regulation (EC) 550/2004 as
amended by Regulation (EU) 1070/2009. The performance and the charging scheme
are implemented through Commission Regulation (EU) 691/2010 (the ‘performance
regulation’) and Commission Regulation (EC) 1794/2006 as amended by Commission
Regulation (EU) 1191/2010 (the ‘charging regulation’), respectively. Both, the
performance regulation and the charging regulation are currently revised.
According to
the performance regulation, national supervisory authorities (NSAs) have to
draw up performance plans covering all key performance areas (safety,
environment, capacity, cost-efficiency) and for the duration of so-called
reference periods. Member States adopt these performance plans together with
national performance targets that should be consistent with and adequately
contributing to the Union-wide targets. Targets are expressed on the basis of
selected key performance indicators.
Following
examination comitology procedure, the Commission decides within 15 month before
the start of the reference period on performance targets at Union-level for all
key performance areas. These targets are then broken down on local level.
For the first
three-year long reference period 2012-2014, Member States only had to set local
targets for capacity and cost-efficiency. The environment target expressed as
horizontal flight efficiency was supposed to be achieved at network level. For
the first reference period there was no target setting on safety.
The second
reference period will be of five years duration (2015-2019) and will result in
the setting of Union-wide targets in all four key performance areas.
Controversial n the revision of the performance and charging regulation was the
question on how to address cost-efficiency target setting for terminal air
navigation services due to the heterogeneous nature of service provision.
The
Performance Review Body (PRB) assists the Commission in the implementation of
the performance scheme. Eurocontrol, acting through its Performance Review
Commission (PRC) and supported by the Performance Review Unit (PRU) is designated
as the PRB until 30 June 2015. 
The PRB is
consulting and proposing target ranges and targets in all four key performance
areas. Based on the PRB input the Commission is then proposing targets to the
Single Sky Committee of Member State representatives that then have to agree
the proposed targets. For the first reference period, the PRB initially
proposed a minus 4.5% yearly reduction of charges in the area of
cost-efficiency. This initial target was then watered down to an annual minus
3.2% following the discussion in the Single Sky Committee. A similar process
may be expected to take place during 2013 when targets need to be fixed for the
second reference period 2015-2019.
On the basis
of agreed Union-wide targets, Member States have six month to adopt performance
plans and targets and to submit them to the Commission. The same period applies
to the elaboration of the Network Manager performance plan and target. As of
the second reference period, performance plans and targets have to be
elaborated at functional airspace block level.
The
Commission, supported by the PRB, is then assessing the performance plans. For
reference period 1, the Commission found that initial performance plans did not
allow concluding that the targets included in these plans are consistent with
and adequately contributing to the Union-wide targets. As a consequence, the
Commission adopted a Recommendation to Member States to revise performance
targets contained in performance plans.
The
subsequent revision of performance plans showed some improvement, however, not
at a level expected by the Commission. In addition, some Member States
contributed significantly more to achieving the Union-wide targets then others.
The PRB assessed the revised performance plans and recommended to the
Commission to adopt those revised performance plans. The PRB argument was that
considerable improvement was achieved, that the revised traffic forecasts mean
that the capacity targets will be reached and that the anticipated loss due to
traffic risk sharing is larger than the remaining gap to the Union-wide target.
The
Commission accepted this reasoning mainly due to its past experience that
further improvements would be very likely blocked in the Single Sky Committee.
Another argument was that the first reference period was only of three years
duration and that a long fight with Member States would create uncertainty
almost until the middle of the first reference period. Theoretically, the
Commission could have gone one step further and could have decided following
comitology examination procedure to ask Member States for corrective measures.
Following the
adoption of performance plans and targets, the Commission has developed a
Commission Recommendation on monitoring and reporting in order to facilitate
and to harmonise monitoring and reporting on the achievement of performance
targets.
If targets
are not met, the Commission can intervene and ask Member States for corrective
action. However, the tools for enforcement of corrective action are rather
weak. Until today, no experience has been gained as to the feasibility to
implement changes in case targets are not met.
[1]           The Framework
Regulation (EC No 549/2004) - laying down the framework for the creation of the
Single European Sky; The Service Provision Regulation (EC No 550/2004) - on the
provision of air navigation services in the Single European Sky; The Airspace
Regulation (EC No 551/2004) - on the organisation and use of airspace in the
Single European Sky; The Interoperability Regulation (EC No 552/2004) - on the
interoperability of the European Air Traffic Management network
[2]           An overview of SES
legislation can be found in Annex III
[3]                 Regulation (EC) 216/2008, as
amended by Regulation (EC) 1108/2009
[4]           Council Regulation
(EC) 219/2007; SESAR (the Single European Sky ATM Research Programme) is a
technical pillar of SES - an ATM improvement programme involving all aviation
[5]           Regulation (EC)
216/2008, (as amended by Regulation (EC) 1108/2009) Art 65a
[6]           COM(2012) 573 final
[7]           As mentioned above,
the amendments to the EASA Basic Regulation will be of a technical nature and
therefore will not be analysed in the IA context
[8]           http://ec.europa.eu/governance/impact/planned_ia/roadmaps_2013_en.htm#MOVE
[9]           24 July 2012, 25
January 2013, 22 February 2013, 5 March 2013
[10]          Com(2011)731 final
[11]          [ reference will be added after publication]
[12]          For the list of
stakeholders consulted – see Annex IV
[13]          In the context of
this document 'comitology' refers to procedures applied within the framework of
delegated and implementing acts
[14]          http://ec.europa.eu/commission_2010-2014/kallas/headlines/news/2012/10/ses_en.htm

[15]          Analysis in this section is
based on the Performance Review Report on European
Air Traffic Management Performance in 2011, by Performance Review Commission, http://www.eurocontrol.int/documents/performance-review-report-european-air-traffic-management-performance-2011,
referred hereinafter as PRR 2011
[16]          Data for 2012 are
not yet available as accident investigations take considerable time, but there
are no known events for 2012 either
[17]          Paris Charles De
Gaulle 2000, Milan Linate 2001 and Überlingen 2004
[18]          http://www.atmseminar.org/seminarContent/seminar6/papers/p_042_S.pdf

[19]          Air traffic is
generally divided between Instrument Flight Rules (IFR) and Visual Flight Rules
(VFR). Basically in IFR the pilot can fly also by reference to instruments only
and receives a more comprehensive service from the ANSP. In VFR the pilots
receive less service, mainly navigate by sight, but are also much more free to
operate as they wish. For the latter reason there are no sound statistics about
VFR flights. At the same time VFR flights have less relevance for central
services. 
[20]          STATFOR is Eurocontrol's
statistics service
[21]          "en-route"
means the portion of the flight where the aircraft is in cruise and not
descending to, or climbing from an airport. Often for simplicity's sake this is
defined as the part of the flight that is 30-40 nautical miles removed from
either departure or arrival airports
[22]          Depending to great
extent on the airlines business model. Generally low cost carriers pay a higher
proportion as their other costs are lower.
[23]          "gate-to-gate" refers to
addressing the flight in its entirety, from departure gate to arrival gate
[24]          This includes also the costs of
delays etc.
[25]          PRR 2011
[26]          European Union
emission inventory report 1990–2010 under the UNECE Convention on Long-range
Transboundary Air Pollution (LRTAP) – EEA Report – 8/2012
[27]          The extra distance
flown by aircraft in comparison to the shortest route (the great circle route).
Currently the average route extension per flight is 42km
[28]          Study on current and
future aircraft noise exposure at and around Community airports – EC DG TREN –
B2002/B2-7040B
[29]          Performance Review
Board, 2012, Performance Review Report 2011
[30]          Annex II provides an
overview of the various parties involved in ATM and their roles
[31]          Pieces of airspace,
controlled by a single controller
[32]          Performance Review
Commission of Eurocontrol
and American Federal Aviation Administration, US / Europe comparison of ATM related performance in
2010, March 2012. Unless otherwise mentioned, the studies made by the PRB apply
to the entire 39 State Eurocontrol area, which is where SES finds application
either through EU or Eurocontrol mechanisms
[33]          It should be noted
that in addition to 67% more controlled IFR flights, the US system handles
around 5-6 times more Visual Flight Rules (VFR) general aviation flights, many
of which use at least some air navigation services, but are not included in
flight-time statistics
[34]          The comparison with
New Zealand is interesting since in New Zealand there is a strong airspace user
involvement in the investment planning. For Canada it is interesting since the
ANSP is controlled by a private sector service provider
[35]          CANSO, 2011, Global Air Navigation Services
Performance Report 2011 www.canso.org/policy/performance

[36]          It should be noted
that for New Zealand and Canada this proportion is driven also by the
geographical factors as a large oceanic or arctic area requires controllers,
but relatively little in the way of ground infrastructure
[37]          Except for ATCO
costs, where the difference between the Europe and the US is relatively small.
This is further discussed in Section 2.1.1.1
[38]          The UK based NATS,
is 49% privately owned and also to some extent seeks to expand its operations
beyond the national airspace. Other ANSPs with private company form are still
close to 100% publicly owned.
[39]          Typically
Meteorological (MET), aeronautical information (AIS), communication, navigation
and surveillance (CNS) etc. services.
[40]          Recital 13,
Regulation 550/2004
[41]               Swedish LFV and Scottish HIAL
outsource CNS services
[42]          PRB, June 2012,
Overview of Terminal ANS costs and charges for States participating in the SES
Performance Scheme (RP1), Data collection, verification, consolidation and
dissemination, Preliminary data
[43]          See section 2.1.1.2
on the functioning of the performance scheme.
[44]          Summary report of
activities of the NCP Task Force on NSAs in SESII, 6/11/2012.
[45]          https://www.eurocontrol.int/sites/default/files/content/documents/official-documents/reports/2012-sesreport2011.pdf 

[46]          N. B. the audit
results are confidential between EASA, Commission and the audited State, so it
is not possible to go into more detail in this text or to list findings in
relation to the organisational structure as it would make identification
possible. However already now it is clear that the best results have been in
States with full separation and most problems have been encountered in States
with only functional separation.
[47]          Regulation 691/2010
[48]          "The impact of
fragmentation in European ATM/CNS 2006" by Eurocontrol Performance Review
Commission; April 2006 http://www.eurocontrol.int/sites/default/files/content/documents/single-sky/pru/publications/other/fragmentation.pdf

[49]          ACC = Area Control
Centre, CNS=Communication, Navigation and Surveillance services.
[50]          Regulation 549/2004
Art 2(25)
[51]          E.g. The
Irish-Austrian-Croatian-Swedish-Danish COOPANS project, https://www.iaa.ie/COOPANS 
[52]          A possibility of
adding additional functions through comitology was included in the 2009 SES2
package. See art 6(4) of Regulation 551/2004
[53]          For a more detailed
presentation of these new services, see the latest version of the Master Plan
document https://www.atmmasterplan.eu/
[54]          See SES 2+ support
study section 3.6.2
[55]          En-route unit rate
is an index determining the charge paid by the aircraft for ATM services during
the cruise part of the flight. Normally the charge is a function of the unit
rate, the distance flown and the maximum weight of the aircraft. Terminal
charges around the airports are determined separately
[56]          See also description
of the "do nothing" options in Annex V for a more detailed
description of the baseline.
[57]          See figure 2-2
[58]          Regulation 552/2004
allow for implementing measures to introduce new concepts of operation in line
with the SESAR Master Plan. Together with the SESAR minimum scenario
(implementation pack 1) improvements this would e able to push some already
existing and mature technologies to more widespread use. http://tentea.ec.europa.eu/download/calls_2010/fab/fab_call_2010_annex_ii.pdf

[59]          E.g. Regulation
549/2004 Art 12, Regulation 550?2004 art 12(2), Regulation 691/2010 art 17(3)
etc.
[60]          Regulation 550/2004
Art 9a
[61]          For example SESAR
master plan reforms air traffic flow management by transforming it into
time-based 4D trajectory management with tight tolerances. It also introduces a
new type of information exchange network (SWIM). These types of services are
most efficiently provided centrally due to their co-ordinative or connecting
natures, but they are not included in the current Network Manager scope. https://www.atmmasterplan.eu/ 
[62]          The 2011 White Paper
on transport estimated that EU air transport activities could more than double
by 2050.
[63] Communication from the Commission to the European Parliament, the
Council, the European Economic and Social Committee and the Committee of the
Regions COM(2011) 206/4
[64]          Annex IV, Figure
IV-20
[65]          Annex IV, Figure
IV-21
[66]          Annex IV, Figures
IV-22 and IV-17
[67]          Annex IV, Figures
IV-11, IV-23 and VI-24
[68]          Annex IV, Figures
VI-25, IV-14, IV-13 and IV-7
[69]          Annex IV, Figures
IV-26 and IV-19 
[70]          Analysis of impacts
is to an extent based on the work of the consultant. For full details, see the
IA support study, especially its chapters 5-7  [add
link after publication]
[71]          Definition of these
costs is provided in chapter 1 of Annex V
[72]          For a full
description of the assessment of options in all policy areas, see Annex V. Due
to space constraints, only conclusions are presented in the main text
[73]          Conservative
estimate based on experiences from similar unbundling cases both in ATM (e.g.
LFV or HIAL Ltd) or other infrastructure industries such as energy or rail
sectors. See box 5-1 and Annex V.
[74]          Total ANS costs amount to
€ 8.3 billion in 2011, according to PRR 2011, of which 27% is taken up by
support service costs (source: PRU). A reduction of 20% of these costs is
around € 450 million.
[75]          Commission IA on the
opening of the market for domestic passenger transport services by rail, p. 30.
[76]          The average European
costs of staff at ANSPs is approximately € 162 000 a year (costs for
supervision in France and Germany for 2011, corrected for overheads and
adjusted to EU 27 averages based on GDP per capita expressed in PPP)
[77] For further details, see discussion on social impact of Option 1.3
at the end of part 2 of Annex V.
[78]          Average European
costs of staff at ANSPs as calculated above calculated for 1,5 FTE per one ANSP
and 1 FTE at airspace user side, calculated for 37 ANSPs and 37 airspace
users
[79]          In most States the
ANSP pay levels are higher than at the authority
[80]               See annex V, pages 135-8
[81]               i.e. a net €4.5 million saving
as the €6.5 Million saving from option 3.2 would still take place 
[82]               According to the 2011 SES
implementation report (published June 2012), there are a total of 37 NSAs in
the 29 SES States. A Number of States have a separate NSA for example 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. There are also a total of 28 fully separated
NSAs in 29 SES States
[83]               www.eurocontrol.int/sites/default/files/content/documents/official-documents/reports/2012-sesreport2011.pdf 
(see Annex 2)
[84]               Entirely functional separation
exists in Cyprus, Greece, France and Ireland, whilst Portugal (MET),
Netherlands (MET), Spain (Military) and Denmark (AIS) have a small part of the
oversight with only functional separation, whilst the majority is
institutionally separated
[85]          ~€ 6.5 M p.a. -
~€ 2 M p.a.= ~€ 4.5 M p.a.
[86]          Unless otherwise
mentioned, all figures and estimates in this part are derived from PRB work or
discussion with PRB representatives
[87]          See Annex V, chapter
5 for details
[88]          In particular for
climb and descent phases of the flight, the routing and climb profile of
minimal fuel burn and emissions (utilising e.g. maximum rate climbs) has the
counter-effect of increasing noise, given that most efficient route could go
through densely populated areas
[89]          Ranges provided to
encounter for the 20% of uncertainty factor linked to the  variations in
efficiency of different NSAs
[90]          N.B. where
quantification is impossible due to the amount of variables, the direction and
strength of change is indicated with + or – signs and their number. The change
is always exhibited against the baseline
[91]          See Annex V, chapter
6 for details
[92]          Performance Review
Report 2010 http://www.eurocontrol.int/news/performance-review-report-2010-now-available
- roughly a quarter of the improvements can only be made at the European level
and majority require cross-border co-ordination
[93]          Costs for
supervision in France and Germany for 2011 corrected for overheads and adjusted
to EU 27 averages based on GDP per capita expressed in PPP
[94]          Would be determined
by comitology procedure
[95]          See Annex V, chapter
7 for further details
[96]          4D trajectory
management is one of the key SESAR concepts, which transforms current air
traffic flow management function into time-based activity, where tight time
windows are used to determine the position of the aircraft at each point along
its route. This allows for example to maximise runway capacity as any idle
moments on the runway can be avoided and conversely no aircraft will have to
wait in the air for the runway to become free as the aircraft will not be
allowed to depart before a clear and optimal trajectory along its route can be
guaranteed all the way to the destination gate.
[97]          Further details in
Annex V, chapter 7
[98]          www.ead.eurocontrol.int/eadcms/eadsite/index.php.html
[99]          www.eurocontrol.int/articles/pan-european-network-services-pens
[100]         Option 3.2 mutual
co-operation and pooling of experts-  ~ €75 million p.a. and option 3.3.
adding to 3.2 also institutional separation  - ~ €150 million p.a.
[101]         See http://www.camecon.com/AnalysisTraining/suite_economic_models/E3ME.aspx
 and chapter 1 of Annex V for further information
[102]         See Annex V, chapter 8.
[103]         Based on staff
figures for 2010 (ACE2010) of 45165 extrapolated to 2014 using changes recorded
in ACE2007 – 2010 reports. Different scenarios’ annual rate of cost decreases
were then applied to the staff numbers. Scenarios were as defined in ‘EU-Wide Targets
for RP2 Indicative Performance Ranges for Consultation February 2013’.
[104]         Scenario 2 and 3
impacts are on top of the baseline
[105]         This seems to be the
evidence from the NavCanada case, where numbers of controllers have grown to
handle the increase in traffic, but overall staff has been reduced by 20%. See
also discussion on option 1.3 in Chapter 5 and Annex V.
[106]         For those which are
still only functionally separated from the ANSP. Entirely functional separation
exists in Cyprus, Greece, France and Ireland, whilst Portugal (MET),
Netherlands (MET), Spain (Military) and Denmark (AIS) have a small part of the
oversight with only functional separation, whilst the majority is
institutionally separated
[107]         This assumes also
that the aircraft manufacturers plans for technological development in reducing
fuel burn to counter for the increase in traffic, are realised. 
[108]         See section 5.6 on
environment in PRB study on RP 2 http://ec.europa.eu/transport/modes/air/consultations/doc/2012-06-08-regulatory-approach-document.pdf
[109]         The least fuel burn –
and consequently least emissions – as well as best safety is achieved by a
climb at maximum power directly to cruising altitude. However this also creates
the greatest amount of noise and that noise is concentrated close to the
airport instead of being distributed more evenly in the population. 
[111]         Overlaps have been
cancelled as described above 
[112]         Due to uncertainties
involved in future pay-scales, actual need of personnel and various external
factors, a 20% uncertainty factor has been applied
[113]         COM/96/57, ‘Air
traffic management – freeing Europe’s airspace’, 6 March 1996.
[114]         Regulation 216/2008
Art 2
[115]         Eurocontrol,
‘1963-2003, 40 years of service to European aviation’
[116]         Protocol
consolidating the Eurocontrol International Convention relating to Co-operation
for the Safety of Air Navigation of 13 December 1960, as variously amended
[117]         Regulation 550/2004
Art 6
[118]         Regulation 677/2011
[119]         Regulation (EC) No
1070/2009 of the European Parliament and of the Council of 21 October 2009
amending Regulations (EC) No 549/2004, (EC) No 550/2004, (EC)
No 551/2004 and (EC) No 552/2004 
in order to improve the performance and sustainability of the European aviation
system
[120]         Commission regulation
(EU) No 691/2010 of 29 July 2010 laying down a performance scheme for air navigation services and network functions and
amending Regulation (EC) No 2096/2005 laying down common requirements for the
provision of air navigation services
[121]         Commission regulation
(EU) No 677/2011 of 7 July 2011 laying down detailed rules for the implementation of air traffic management (ATM)
network  functions and amending Regulation (EU) No 691/2010
[122]         Commission regulation (EU) No 1191/2010 of 16
December 2010 amending Regulation (EC) No 1794/2006 laying down a common
charging scheme for air navigation services
[123]         Communication from
the Commission of 1 December 1999 to the Council and the European
Parliament - The creation of the Single
European Sky, COM(1999) 614 final
[124]         Regulation (EC) No
549/2004 of the European Parliament and of the Council of
10 March 2004 laying down the framework for the creation of the
Single European Sky
[125]         Regulation (EC) No 550/2004 of the European Parliament and of the
Council of 10 March 2004 on the provision of air navigation services
in the Single European Sky
[126]         Regulation (EC) No 551/2004 of the European Parliament and of the
Council of 10 March 2004 on the organisation and use of the airspace in the
Single European Sky
[127]         Regulation (EC) No 552/2004 of the European Parliament and of the
Council of 10 March 2004 on the interoperability of the European Air Traffic
Management network
[128]         Council regulation 219/2007 of the Council, of 27 February
2007, on the establishment of a Joint Undertaking to develop the new generation
European air traffic management system (SESAR)
[129]         Commission regulation (EU) No 255/2010 of 25 March 2010 laying down common
rules on air traffic flow management
[130]         These included: AEA
(Association of European Airlines), ETF (European Transport Workers’
Federation), CANSO (Civil Air Navigation Services Organisation), DFS (Deutsche
Flugsicherung), DSNA France (Direction des services de la navigation aérienne),
HIAL UK (Highland and Islands Airports Limited), IFATSEA (International
Federation of Air Traffic Safety Electronics Associations), IATA (International
Air Transport Association), IFATCA (International Federation of Air Traffic
Controllers’ Associations), LFV Sweden, NATS UK, NAV Canada
[131]         Presentations are
accessible on: http://www.eesc.europa.eu/?i=portal.en.events-and-activities-single-eu-sky-ii-presentation 
[132]         The
issue of SES applicability over high seas of the ICAO North Atlantic Region is
linked to the need to prepare the legal text for possible Icelandic membership
[133]         This question is
linked to the need to comply with the requirement stemming from SES package of
2009, which is included in Art 65a of Regulation 216/2008. It requires the
Commission to adapt the SES regulations to EASA's new scope by removing
overlaps and gaps once the fundamental implementing rules have been created
[134] A sector is a piece of
airspace, handled by a single controller. Its size is mostly limited by the
density if traffic as a controller can only handle a limited amount of aircraft
at the same time.
[135]       This approach differs
from the approach set out in the IA Guidelines for administrative costs, as it
would have been very difficult, if not infeasible, to separate administrative,
regulatory and compliance costs.
[136]         Analysis of impacts
is largely based on the work of the consultant. For full details, see the IA
support study, especially its Appendix D [add
link after publication]
[137]         AEA position paper,
‘Public consultation in view of a simplification, clarification and
modernisation of the Single European Sky legislation (SES II +) and alignment
of SES and EASA rules’, 25 January 2013.
[138]         ATA, ERA and AEA
joint position "A Blueprint for the Single European Sky" in the World
ATM conference in Madrid 12 February 2013
[139]         Public consultation
on the proposed regulatory approach for a revision of the SES performance
scheme addressing the second reference period (RP2) and beyond 21/06/2012
[140]         AOPA,’ Air Traffic
Services Brief: Flight Service Station (FSS) Modernization: Lockheed Martin to
Provide Flight Services for the 21st Century’,17/7/2007,  see
http://www.aopa.org/whatsnew/air_traffic/a76_process.html
[141]         See
https://faaco.faa.gov/index.cfm/announcement/view/11872
[142]         Main limiting factor
to free movement of controllers is the language barrier. For that reason most
mobility happens in centres that serve only the (mostly English speaking) upper
airspace  or in States where only English is used in radiocommunications.
[143]         Report on the market
functioning of network industries (Electronic Communications, Energy and
Transport) produced for the Economic Policy Committee and published by the
Commission on 16 November 2012
[144]         Siim Kallas, European
Railways at a junction: the Commission adopts proposals for a Fourth Railway
Package, http://ec.europa.eu/commission_2010-2014/kallas/headlines/news/2013/01/fourth-railway-package_en.htm,
30/01/2013
[145]         Commission Staff
Working Document, Impact Assessment Accompanying the document: Proposal for a
Directive of the European Parliament and of the Council amending Directive
2012/34/EU of the European Parliament and of the Council of 21 November 2012
establishing a single European railway area, as regards the opening of the
market for domestic passenger transport services by rail and the governance of
the railway infrastructure, Brussels, 30.1.2013, COM(2013) 29 final; ANNEX VIII
[146]         COM(2013) 29 final,
Qnnex V, section 5
[147]         Idem
[148]         Idem
[149]         Development of a real
market with competitive pressures takes time, so initial results would be less
high, whilst over time a much better result could be expected
[150]         Total ANS costs amount to
€ 8.3 billion in 2011, according to PRR 2011, of which 27% is taken up by
support service costs (source: PRU). A reduction of 20% of these costs is
around € 450 million
[151]         Currently many
meteorology services are provided to the general public for free, whereas
aviation pays a disproportionate amount of the total cost
[152]         Costs for supervision
in France and Germany for 2011 corrected for overheads and adjusted to EU 27
averages based on GDP per capita expressed in PPP
[153] http://www.navcanada.ca/ContentDefinitionFiles/newsroom/Speeches/2012/CEO_Historical_Presentation_EN.pdf

[154]         http://www.eurocontrol.int/articles/prc-and-prb-publications?tab_0_1
(2010 report, Annex 6, table 0.5)
[155]         See Reg. 549/2004 Art
10 for general requirement on Member States to consult and e.g. Art 6(5) of Reg
551/2004, or Art 10(2)(b) of Reg 691/2010 for existing specific requirements
[156]         PRC Performance
Review Report 2011: UK NATS ranks fourth with a service unit cost of
72,9€/service unit behind only Switzerland (92,9€), Spain (continental 75,5€)
and the Netherlands (73,5€), leaving the other 31 surveyed providers behind
with lower cost levels. It should also be noted that the Dutch rate is
abnormally high due to a one-off cost to build equity capital
[157]         Average European
costs of staff at ANSPs as calculated above calculated for 1,5 FTE per one ANSP
and 1 FTE at airspace user side, calculated for 37 ANSPs and 37 airspace users
[158]         For example, airlines
have been critical of some of Australia’s ATM investments as being politically
driven
[159]         Report on the SES
Legislation Implementation (Reporting period January/11 - December/11) produced
by EUROCONTROL upon request of the European Commission DG-MOVE
[160]         Costs for supervision
in France and Germany for 2011 corrected for overheads and adjusted to EU 27
averages based on GDP per capita expressed in PPP
[161]         An average trip
within Europe for 14 days, including 14 per diems of € 250 plus € 300
for the travel
[162]         https://www.eurocontrol.int/sites/default/files/content/documents/official-documents/reports/2012-sesreport2011.pdf
[163]         The figure is likely
to be less for the small NSAs – especially if they are merged into the main
NSAs, but equally larger for the large NSAs so the figure of 10 is an average.
[164]         Unless otherwise
mentioned the figures and assessments in this part come from the Performance
Review Body, which has been set up to study and advice the Commission on ATM
performance matters.
[165]         The extra distance
flown horizontally due to sub-optimal routings, avoiding restricted areas etc.
[166]         Each aircraft has an
optimal combination of speed and power setting at which it requires least fuel
to climb. Similarly for most aircraft, the most fuel-efficient descent would be
a gliding descent. Finally the current routings may involve several
intermediate climbs and descents during the cruising phase, all of which cause
additional fuel burn and delay:
[167]         Typically suboptimal
taxiing routes, waiting with engines running for e.g. de-icing or for turn to
take-off. It is common for an aircraft to burn several hundred kilos of fuel
during taxi, so the combined result of these inefficiencies can be considerable
[168] Table 4-1: ANS impact on fuel efficiency (PRR 2009) reproduced from
the PRB’s ‘Performance Scheme: Initial EU-wide Targets Proposals’, August 2010.
[169] PRU Technical Note, ‘Vertical Flight Efficiency’, March 2008.
[170]         See for example the
"Tango routes" controversy: http://news.bbc.co.uk/2/hi/uk_news/england/7124021.stm

[171]         Typically
south-eastern Europe has persistent capacity issues, despite being outside the
busiest airspace formed roughly by the London-Paris-Frankfurt triangle
[172]         PRB, ‘Report on the
preparation of the revision of the SES Performance Scheme addressing RP2 and
beyond’, ver 1.0, 17 July 2012
[173]       The annual performance
review reports (PRRs) are done by the Performance Review Commission, which
essentially enlarges PRBs scope to serve all Eurocontrol Member State and not
just the EU
[174]       Information obtained
from two interviews
[175]         Formally the targets
are still Commission decisions and hence the Commission is formally the
regulator
[176]         Costs for supervision
in France and Germany for 2011 corrected for overheads and adjusted to EU 27
averages based on GDP per capita expressed in PPP
[177]         www.ead.eurocontrol.int/eadcms/eadsite/index.php.html

[178]         www.eurocontrol.int/articles/pan-european-network-services-pens

[179] Using the Eurocontrol PRC ACE2010 report
[180] PRB, ‘EU-Wide Targets for RP2 Indicative Performance Ranges For
Consultation February 2013’.
[181]       Rounded off to 3400 in chapter 6 of main document due to the inaccuracies
inherent in any such estimate.
[182]         http://www.eurocontrol.int/sites/default/files/content/documents/single-sky/pru/publications/other/fragmentation.pdf