Air traffic control – the business model is broken
Everyone hates a monopoly, except of course, those that have one. So when faced with the opportunity to break up a monopoly, most regulators are only to keen to be seen to do so. Monopoly suppliers are very much in the news in air transport at the moment, so it might be time to stop and reflect. Depending on who you talk to, the two most well known natural monopolies in air transport are said to be airports and air traffic control. If that is true, discussions about competition are irrelevant. A natural monopoly is not capable of being ‘fixed’ by being broken up, or by having competitors introduced. All that can happen is that they be appropriately regulated. Finding suitable regulations for these entities is perhaps best described as a work in progress. That might be because there is still dispute that they are in fact natural monopolies in the first place. In the rail industry, whilst the train services are often privatised, the tracks themselves are usually State owned, or at least, owned by a different entity to the train service providers. The same is true in the power industry with the power lines. It may be that this is what is required in aviation too. It may also help to think about options like this in air traffic management provision. What is increasingly clear in the ATM arena is that the European model is broken. When it was decided to separate regulation and provision of air traffic control services it was seen as a very good first step towards widespread rationalisation of the fragmented and dysfunctional air traffic control system for Europe. Sadly, what it actually meant was the creation of 37 different profit and loss accounts. And 37 regulators. Making it worse was the fact that the model called for strict control over charges. And, it was designed on the assumption of unending growth. Maybe what was needed, given the courage that the decision to create commercial entities must have taken, was the courage to go all the way, and create one commercial air navigation service provider. Not that that would have made the system more competitive of course. At least not at the moment. The European Low Fare Carriers Association advocates using the new technologies to create, in effect, a common infrastructure provider, and then a choice of service suppliers. This is clearly innovative for the ATM industry – which of itself makes it problematic. But, it has to be said that the failure of the current regulatory structure is becoming apparent. The ATM industry is currently designed to be “cost plus.” With a sudden decrease in traffic, the cost per transaction must go up. Airlines are screaming with the pain, but the ANSPs can do little about it. If there is what is euphemistically called an ‘under-recovery’ it must be recouped within two years. The problem was conceded by CANSO at the end of March, with an open letter on behalf of its members to its airline customers. ANSPs share the airlines’ pain, and they are doing what they can. But that there is a limit to what can be done in the short term. Suck it up. Equally importantly, this means that there is no way to fund development of new systems and capacity enhancements. That is a fundamental point given that we are at the particular crossroads we are at: the corner of Slump-in-Traffic and New-Systems. This is not a service issue; it is a service model issue. At the recent ATC Global conference in Amsterdam, Boeing ATM’s Neil Planzer put the cat amongst the ideological pigeons by noting that at best, the corporatised ANSPs could do tactical things. And, he noted, they had lost the right to run to the State for bail out funds the day they elected to become corporatised monopolies. Airlines are protesting loudly at the pain of the costs; ANSPs are trying to run businesses that respond to their customers but which do not go bankrupt in the process. What can be done? The answer everyone is clinging to is new technology. Eamonn Brennan, the CEO of the Irish ANSP, put that idea into context in his presentation. Again. To make his point he gave the same presentation that he gave 5 years ago. ANSPs are starting to look like performers in the world’s longest running production of Waiting for Godot, His point then, and his point now, is that we can waste significant amounts of time writing reports, commissioning studies and creating committees, but all that will do is waste money. The fact is that the aircraft today have significantly more technology on-board than is used to execute the air traffic control services that they receive. A modern aircraft can land completely automatically with only a third of its avionic equipment switched on. We control aircraft built and equipped in the 21st century with rules and processes developed half way through the 20th. So how do we fix it? Does this mean that we need to spend more on SESAR? Brennan’s answer to that is not until we have started to use what we have. Aircraft can already do tailored arrivals, but to do so will need to use new, different, procedures. And so will the controllers. That is proving a sticking point. Airlines keen to use tailored arrivals where available, in Melbourne for example, are finding that the controllers are having trouble giving up their authority to the aircraft. They are the ones that want to tell the aircraft what to do. They are the controllers after all. The recent trail environment flights, AIRE and ASPIRE, across the North Atlantic and Pacific respectively, are also examples of what can be done, and the savings in fuel and CO2 that can be made, using the existing technology. In addition to tailored departures and arrivals the aircraft taking part in those trials were fed dynamic weather information, allowing them to alter their route to avoid bad weather and take advantage of winds. What is remarkable about that is the realisation that this is not the case for all aircraft today. At the moment, aircraft routinely fly for 14 hours with more than 350 lives at stake with exactly the same weather information that you and I use to decide whether or not to take an umbrella when we go to work. And the information is about as up-to-date. But as the test flights have shown, that need not be the case. And it can be done today. Adopting these sorts of changes will also have capacity implications. There is no reason to continue to use minima and separation standards from 1950. If we updated the standards to what the aircraft can do now, we could significantly increase airport throughput. That might mean that the current pinch point that is slots is less contentious. That, in turn, might throw the airport debate into a spin. Would the airlines that currently make the occasional windfall gain from the sale of slots be prepared to share that gain with the builders of the slots, in return for guaranteed capacity increases and service improvements?Trackback from your site.