Published on March 4, 2014
How sharing Air Traffic Control services between airports could reduce cost and improve service Analysis & commentary for decision makers in the aviation industry H ELIOSA DVISER Shared ATC services for airports
Air Traffic Control (ATC) services can represent a major cost for airports, many of which are already under great commercial pressure. Sharing ATC services between several airports is one way in which they could reduce their costs, and potentially achieve other benefits such as improving the services they offer and overcoming common staffing issues. This paper explains how ATC services could be shared between airports and offers a collaborative model that airport operators can use to achieve it. Introduction The provision of Air Traffic Control services are significant operating and capital costs at any airport. Sharing ATC services between airports is one way in which the costs could be reduced. This paper: presents the economic background for airports, describes how ATC services could be shared between airports and the costs and benefits that can be expected, presents a commercial model that could be used to achieve this, borrowed from the airline industry. The commercial challenges facing airports Many airports are under enormous financial pressure Airports are under financial pressure from many directions. Security and border management obligations have become much more onerous since the 9/11 terror attacks. The financial crisis of 2008 changed the economic environment and led to significant reductions in air transport movements. Low cost carriers have massively expanded their operations but revenue per passenger has fallen. The toughest challenges are faced by smaller airports. The EC has stated that1 "airports that have fewer than 1 million passengers per annum [are] typically struggling to cover their operating costs". With a similar theme, ACI states2 "airports only gain equivalent competitive economies of scale as they approach the 5 million passenger threshold". New EU rules on State Aid are proposed that would impact the support that airports can have from regional governments and Annabelle Lepièce, a lawyer representing the French region of Languedoc-Roussillon, has stated that "if the guidelines are applied as the Commission intends to, it could lead to the closure of around 100 airports". 1 2 1 Draft EU Guidelines on State Aid to airports and airlines (2013) Airports & State Aid: How to protect both growth & competition (2013)
The consequences of these pressures are amply illustrated in the airport market. In the UK, Prestwick and Cardiff airports have returned from private to state ownership. Both airports were loss making and were sold for a nominal fee. In Greece, the government has had to reject claims that it will be closing 22 regional airports. In Spain, several regional airports have been built that have little chance of being commercially viable. For regional airports, commercial pressures are compounded by trends in the airlines market. Regional airlines have difficulty in profitably competing with low cost carriers and are cutting back. In Europe, both CityJet and Flybe have reported substantial losses. As airlines withdraw unprofitable routes, smaller airports, especially those with small low cost operations will lose traffic to the big hubs. Without radical action these airports face inevitable decline. Within the EU are 460 nominally commercial airports, only about 15% of which are profitable1 For regional governments, their local airports nevertheless remain an important part of their economic infrastructure. Airports are seen as providing the potential for jobs and prosperity to the local community, as well as a link to the world. Regional governments are usually keen to support their airports but are less well equipped to ensure their commercial viability. They may therefore be particularly interested in initiatives that help to ensure that airports are able to operate viably, creating a business base from which to build more local employment and economic activity. The problem for airports is that they have significant fixed or inelastic costs, in part arising from the regulatory requirements of their operating license. Smaller airports do not benefit from economies of scale (see graph below). The costs of ATC services are significant for airports. They are also fairly inelastic because even one passenger aircraft can require a full ATC service. Airports with fewer than 5 million passengers per annum are particularly vulnerable as described above. ATC costs are inelastic because even one aircraft can require a full ATC service Ground ATC service (may be combined with Tower) 1 reason.org/news/show/1013705.html 2
Shared ATC services for airports What is shared ATC? There is presently much discussion in Europe about how ATC services could be shared to save costs. Under the Single European Sky performance scheme, a "centralised services" option has been proposed by EUROCONTROL as a means by which certain ATC functions will be provided centrally instead of being replicated in each country. In this paper, we focus on a local version of this concept. We describe how the two main ATC services that are required for airports above a minimum size (the approach and the tower services) can be shared between several airports. The approach service, delivered by the approach controller, provides the ATC services for arriving or departing controlled flights. The approach service takes aircraft to/from the en-route airspace and feeds them to the tower controller. The approach controller usually relies on a radar screen, but in lower density areas they may provide "procedural" control without using radar. In this paper, we are looking at the approach and tower services The tower service is responsible for the ATC service for aircraft and vehicles operating on the airport itself, and aircraft in the air near the airport. Depending on the size of the airport, the tower controller may be supported by a ground controller with the specific task of controlling aircraft and vehicles on the airport surface. The concept for shared ATC services is to move the location of equipment and staff to a common facility and to provide the airport's ATC services remotely from that facility. The new facility (which could be located at one of the participating airports or elsewhere) will be able to provide services at lower cost because the resources will be shared between several airports. It will also provide a chance for participating airports to build centres of excellence in the necessary services and support functions. There are already several examples of an approach control service being shared: CANSO news reported that: "French ANSP DSNA announced [in November 2013] that it has completed consolidation of the lower airspace in the South of France, with approach control for four commercial airports now provided 24/7 by the Montpellier facility rather than each airport separately." Vantage ATS transferred the approach control for Robin Hood Airport Several airport groups have already implemented shared approach control services Doncaster Sheffield to Liverpool John Lennon Airport and created a shared approach control for the two airports. 3
A common approach control service has been provided since 1993 for Heathrow and Gatwick, with all other London airports joining later. The facility, known as London Terminal Control, is co-located with the London Area Control Centre on the UK south coast. Moving the tower control service (and ground control, if applicable) will rely on the emerging technology of remote towers, described on page 6. Both the approach and tower services can be shared, and this could be organised in a two-stage process illustrated below. The transition to a fully shared approach and tower service could occur in two stages 4
Technology The technology required to share approach control is already commonly in use. En‑route ATC has always been conducted at centralised facilities fed with radar data and the necessary communication links. The principles that apply to en-route facilities will match with approach control. It is worth emphasising that there are no technical or operational requirements that prevent the separation of approach and tower control. The technology required to share tower services is less mature and it will require the successful evolution of remote towers (see opposite). The development of remote towers is a parallel development to remotely piloted aircraft The development of remote towers is an interesting parallel to the development of remotely piloted aircraft (commonly referred to as UAV or UAS). The introduction of these aircraft is also driving forward the regulatory changes to accept more remote operations. We can imagine a situation in the future where an aircraft lands at an airport but neither the pilot nor air traffic controllers are present. People Staff functions will not change, although the organisational structure may The functions of staff at a common ATC facility do not change. There will still be a need for all of the functions that would otherwise be provided at each airport. Once both approach and tower services are migrated to the shared ATC facility, the functions there will be: Approach and tower controllers Management, including watch supervisor Maintenance Training HR and support functions (eg rostering, payroll) Of course, the organisational structure may change, particularly because the facility will support more than one airport. At some airports, the approach and tower roles are shared between staff (ie the same staff do both jobs). Therefore sharing only one of these services may bring less efficiency gains at these airports than others and this will need to be considered on a case-by-case basis. Some ATC equipment maintenance services will remain at the airport Some maintenance services will need to be retained at the airport to maintain the existing ATC equipment there. As a minimum, this would be the remote tower and the aircraft communications, navigation and surveillance equipment. Other airport services The use of a shared ATC facility will reduce the number of staff based at an airport. But of course other airport services will still require a human presence. At a small airport, many roles are already combined, eg the same person can be in the fire crew, and provide baggage handling, refuelling and marshalling services, etc. ATC staff do not usually share these roles and so this should be unaffected. 5
Remote Towers In a remote tower (also known as remote virtual towers), the tower and ground controllers look at a video camera image of the airport rather than looking out of the window. The image is captured at the airport and sent to the controllers’ location where it is presented on video screens in “virtual windows”. The other interfaces used by the controllers are also transferred to the remote site, including radio and telephone communications, navigation aid monitoring, ground lights control and the flight data processing system. Controllers “look out” of the virtual windows and operate their normal equipment to provide the usual ATC service. Remote towers are an emerging concept. One of the organisations leading their development is the Swedish ANSP LFV. It has stated that the concept will be operation in Q2 2014 and the picture below shows their Sundsvall Remote Tower Centre. The main advantages of remote towers are: One remote facility can provide a service for several small airports by switching between the airports as required (see adjacent figure). An expensive ATC tower is not required and the video cameras can instead be mounted on a lower-cost mast. The potential disadvantages of remote towers are: The expense of setting them up and operating them especially the ongoing communication costs. The increased reliance on technology and, in particular, the loss of a last-resort fallback option whereby the controller can look out of the window at an aircraft and speak to the pilot on a hand-held radio. Copyright: LFV / Photographer: Kenneth Hellman 6
Benefits of shared ATC services Addressing staffing issues Today, staff recruitment and retention can be a major challenge at smaller airports Smaller airports (especially those in remote locations) struggle to recruit and retain ATC staff because it is a heavily regulated job requiring specialist training and approvals. Finding suitably qualified people in the right location (or willing to move) can be difficult. Retention can also be challenging because salaries at large airports may be higher, so some staff can be tempted to move away. A facility to provide shared ATC services should ease these staffing issues because: It can be placed in a location that encourages staff recruitment. It can offer more varied career development options to staff, increasing staff retention. If it is big enough, it could even establish its own staff ATC training capability so that it does not need to recruit already qualified people. Cost savings The significant cost differences for establishing and operating the shared ATC facility are illustrated in the following table. The table on the opposite page illustrates staffing requirements for a common facility for two typical small airports compared to those of a centralised facility. The savings assume that the movements are low enough that the same staff can effectively support both airports simultaneously. Of course, the potential savings shown need to be set against other CAPEX or OPEX items, including transition and re-location costs. A full investment case will be required for any proposed implementation taking into account the specific local factors. CAPEX OPEX Likely implementation/transition costs: Likely changes to ongoing costs: Increased communications costs Reduced maintenance costs, through common procurement (see section on buying clubs on page 11), single equipment standards and centralised maintenance Reduced staff costs, due to fewer staff overall Reduced management and support costs, due to economies of scale Equipment transfers where possible, or new equipment where not, including remote tower mast, cameras and other systems 7 Staff transition or redundancy costs Safety assessments
Improvements in service Small airports can struggle to meet all their existing regulatory requirements and these requirements are only increasing and becoming more complex. Sometimes airports rely on a small number of staff for critical expertise, leaving them vulnerable in the case of staff absence or work overload. A shared ATC facility will create a critical mass that allows for expertise to be developed and maintained in key areas such as safety and regulatory compliance. Teams of experts can be built that will not be vulnerable to one person becoming ill or leaving. Management of annual leave obligations should also improve. The shared facility will be less reliant on a small number of staff for critical expertise Activities such as safety cases will also benefit from pooled experience and the application of best practice. Finally, other services might be provided that would not be economic for a single airport to provide. For example, the design of new approach procedures is a relatively expensive task for a small airport. The airports would benefit from increased purchasing power for procedure design through a common procurement (see section on buying clubs on page 11). The shared facility may be able to provide new services economically and will benefit from increased purchasing power Additional airports may be added to the group to further exploit the economies of scale and develop the capabilities available to all airports participating. Airport #1 Airport #1 Airport #2 Airport #2 Airport #1 + #2 Airport #1 + #2 current total Shared ATC Shared ATC facility 7 8 15 9 Estimated staff numbers Tower controllers Approach (radar) controllers 10 7 17 10 Air Traffic Assistants 8 8 16 9 Engineers 6 6 12 8 Senior Air Traffic Controllers 1 1 2 1 Secretarial/Admin 1 1 2 1 33 31 64 38 38 Total Annual staff cost saving, assuming typical UK salaries and employment costs 40% Main assumptions: • Airports #1 and #2 based on 2 UK airports with service details taken from public documents • Calculations made for airports operating 7 days/week, 2 shifts/day (not 24h) • Numbers based on judgement and CAA guidelines 8
Implementation and transition considerations Safety As with all ATC operations, ensuring safety will be the primary consideration and there are well-established processes to follow A shared ATC facility must be shown to be safe through the usual processes of safety case development leading to regulatory approval. Work will be required, particularly for remote towers which are still an emerging technology. There are safety assessments and trials of remote towers already underway in several countries including Norway, Sweden and Australia. The consequences of equipment failures must be assessed in the safety case and mitigations devised to ensure an adequate level of safety. This process is mature and well understood for ATC. It is, however, worth noting that the principle of “remote service provision” is well established in aviation, ie that a service can be provided that is wholly and completely reliant on technology. This is already the case for all en-route ATC and also for existing shared approach services such as those described on page 3-4. For remote towers, fallback and contingency operations need to be carefully considered because there may not be any (ATC) qualified staff at the airport to deal with the most severe technology failures. For example, if the voice communication system fails today, then tower controllers can use a hand-held radio to talk to pilots and can even resort to use of light signals. This may not be possible if staff are remotely located. Other backup options include providing a dial-up telephone for emergency use and/or training some airport staff to be able to provide emergency cover. Achieving cost savings We anticipate that the target cost saving should be 25% There is a risk that cost savings are harder to achieve than expected – for example an airport could end up keeping some staff at the airport while having other staff at the new ATC facility. While this can have advantages (eg a phased transition), airports will need to make the sums balance in the long term. Good planning and implementation are essential. A target cost saving for each airport participating in the scheme should be at least 25% over the contract term, compared to the equivalent status quo. Long-term evolution Sharing approach services is a low-risk activity that could be implemented fairly quickly by many airports. However, sharing tower services is subject to greater risk as remote towers are not yet a fully matured, certified solution. Airports would be wise to prepare a justification for the first stage on its own, with further change as a future option that can be activated. With the right implementation, just sharing approach services should still bring overall cost savings. 9
Transition The operational transition of any ATC service requires careful planning and execution. A plan will need to be developed for the operational transition and financial performance. The safety case will address the safety management of the transition and must ensure that any transition risk to service continuity is mitigated. The transition must be planned to ensure service continuity The transition of staff may be a complex issue depending on the location of the new facility. Some staff may need to move house and there is a risk of staff loss at this time. The location of the new facility will need to take these factors into account. There is a chance that some new staff will need to be recruited and trained. These factors will influence the selection of partner airports and location of the shared facility. Training The introduction of remote towers will require staff training as tower controllers move from familiar surroundings to new operational concepts. For approach controllers, the training will be much reduced, especially if the equipment is moved from the airport to the new facility. Re-validation may be required but this will be location specific. Business models The following section describes a possible business model whereby independent airport operators join to procure common services such as the ones described here. It is a model that comes from the airport sector. Similar models already exist in the domain of ATC. For example, there is a buying club called COOPANS established between the ANSPs of Austria, Croatia, Denmark, Ireland and Sweden with the equipment supplier Thales. An appropriate business model for the participating airports is vital to ensure a successful collaboration A buying club is equally relevant in countries where the airport ATC market is not liberalised and a single ANSP provides the ATC services at all airports. These ANSPs will still be seeking ways to reduce costs, especially given cost-efficiency obligations from the Single European Sky. © Mark Brouwer 10
Buying clubs A CUTE ‘Local User Board’ (CLUB) is a mechanism used by airlines, ground handling companies and airports to procure common equipment and operating services at airports. CLUBs can be found at most of the busiest airports in Europe, as well as at international airports elsewhere. The CLUB example offers a practical model for groups of airport operators to jointly procure ATC services. How does a CLUB work and what are its functions? The CLUB model is used to buy and operate CUTE passenger processing systems Common Use Terminal Equipment (CUTE) systems are procured by airlines, normally using the CLUB structure, to manage their airport passenger and baggage processing at that location. The CUTE system comprises hardware, middleware, complex software, communications equipment, 24/7 operation with very high service level availability, and year-round maintenance and operation. CUTE connects check-in, security and boarding gate facilities to airline host systems, ground handling companies, border control, homeland security, police and safety services - in a dynamic and rapidly advancing technological environment. There are several commercial suppliers of CUTE systems and services. Common procurement Each CLUB participant signs an agreement to pay their share of capital and operating costs Payments are usually based on the planned/actual usage of the system A typical CUTE procurement will involve around twenty airlines and ground handling companies, half a dozen ground agencies such as customs and security, as well as the airport company. A typical procurement might involve €2m of capital costs and €8m of on-going operating and support costs. This €10m contract will involve the CLUB in agreeing a requirements specification, target service levels, budget and timescales before inviting proposals from qualified suppliers. Once awarded, based on agreed selection criteria, the supplier will procure, install and operate the system in return for a monthly fee, typically over a 7 year period. The monthly fee payable by CLUB members will include all capital, financing and operations costs, including support staff and the system upgrades needed to ensure continued compatibility with the evolving technology environments particularly in telecoms and computer operating systems. The equipment procured is owned by the CLUB participants, each of whom signs a Master Service Agreement with the contracted CUTE supplier. Each member organisation will pay pro-rata based upon their planned and actual usage of the system, with any necessary reconciliations made at each year end. CLUBs are not-for-profit and benefits are shared with its members 11 A CLUB is not-for-profit and any benefits are shared with the members. A chair is normally appointed from within the membership on a rotational basis. CLUB Members (companies) each have one vote, although Members may have more than one participant, for example for technical and commercial expertise as needs arise.
Functions and benefits The CLUB has on-going functions after contract award, specifically: Service performance monitoring. Collection collation and agreement of new service requirements (service changes). Consideration and approval of changes necessary or proposed by the supplier. Changes of scope such as new members or increased service capability. A CLUB simplifies procurement and brings economics of scale to its members Managing ancillary emerging requirements which impact most or all members, for example long-term technology planning. Service contracts are typically for long durations, normally 5 or 7 years. A CLUB brings these benefits: It simplifies the procurement process for each member. It brings some economies of scale and creates improved purchasing power. It allows users to progress in a federated way, eg through coordinated software upgrades, and coordinated adherence to technology or safety policies and regulations. It harmonises the technology and operational strategies of participants. Applying the buying club to shared ATC services Applying the concept of the CLUB principles to shared ATC services, a group of smaller airports could form a similar buying club with these principles: The buying club would procure all ATC services and equipment for the participating airports. A common specification and service level agreement would apply. Each member would pay in proportion to their usage, for example by an annual forecast of Instrument Flight Rule (IFR) air traffic movements. A long-duration agreement (eg 7 years) would allow time for the buying The CLUB principles could be applied to shared airport ATC services club to deliver enough cost benefit to justify the change. Existing staff could retain employment with their existing employer, or they could transfer employment to the contracted service provider. (Local employment regulations will need to be taken into account.) As with airlines, airport operators can be in a fiercely competitive environment. The principles of the CLUB are important to allow the competing organisations to work together. The CLUB model allows competitors to work together for mutual benefit To avoid airports having to raise the capital to establish the shared service, we anticipate that this requirement will be placed on the buying club supplier. Airports would simply pay a monthly fee whilst the supplier arranges the necessary financing. Suppliers would be attracted to the opportunity by the size of the procurement, creating a competitive market that is required for a successful procurement. 12
Conclusions We believe that sharing airport ATC services could save money and improve service quality In this paper, we have described how ATC services can be shared between airports. There are two services that we have examined: A common approach service that could be implemented today A common tower/ground service that is a few years away from widespread implementation We believe that sharing these services could save money for small airports at a time when many are struggling to stay solvent. It would also overcome common staffing issues and improve the quality of service. Such an approach could be the lifeline that small airports need to keep going in tough times. A not-for-profit business model borrowed from airlines could be applied The proposed business model allows airports to share risk and reward for mutual benefit and has been widely tested in the airport/airline environment. One day, all ATC services may be shared. We may wonder how it was that air traffic controllers actually sat at the airport. Technology is changing so many aspects of our lives that this is not inconceivable. We expect that the advantages will outweigh any disadvantages at least in terms of the cost savings and operating efficiencies that airports crucially need to survive. How can airports move forwards? Airport operators need to identify other airports with which they could collaborate, and then collectively evaluate the concept. A feasibility study will be required that includes these activities: Identifying suitable airports to participate in the buying club. Developing the specifics of the concept for the airports concerned. Preparing a business case to evaluate the concept. Developing an outline agreement for the buying club. Identifying key risks and preparing risk management plans. Engaging with the Civil Aviation Authority (CAA). (We recommend early discussions with the CAA so that the acceptability of different proposals can be tested.) A transition strategy would also need to be agreed, for example: Step 1: Establishment of a centralised approach control centre, and management mechanisms, centres of excellence, etc. Step 2: Transition of all staff and equipment to the new centre. Step 3: Remote tower proof of concept at one airport. Step 4: Transition one airport to remote tower concept. Step 5: Transition remaining airports to remote tower concept. There is a role here for regional governments, trade organisations or similar groups that may wish to coordinate activities for a number of local airports. A regional initiative could bring jobs and stability to local airports, and may overcome the potentially fragmented approach that could otherwise arise. 13
About Helios Helios is a management and technology consultancy, focusing on the Air Transport, Airports and Space sectors. We help improve economic, business and operational performance; diagnosing problems, crafting solutions and delivering results. Our specialists provide problem solving skills for government bodies and agencies, regulators, service providers, industry, and investors. The company was established in 1996 and joined Egis, an international engineering and infrastructure group, in 2013. Helios has its headquarters in the United Kingdom and offices in Dubai (UAE) and Žilina (Slovakia). Twice winner of a Queen’s Award, Helios has a reputation for excellence worldwide and is ISO 9001 certified. How we can help Helios develops policy and strategy advice based on evidential analysis. We can undertake technical, economic and feasibility studies to support investment decisions. We can further support detailed planning and delivery of changes. Our detailed knowledge of Air Traffic Management enables us to assess potential changes in organisation and technical arrangements. Our wider knowledge of the airport market, and operations at larger and small airports also support this. We are also part of the Egis group a €900M infrastructure group that operates airports and other transport infrastructure around the world and can draw on their experience in our work. Get in touch… For further information please contact: Nick McFarlane Managing Director T E +44 1252 451 641 email@example.com linkedin.com/in/nickmcfarlane 14
The c ont ent o f t his d oc um ent is intend ed fo r general guidance o nly and , where rel evant , rep resent s o ur und erst and ing o f c urrent stat us of t el ec oms ind ust ry m att ers. Act io n sho ul d not b e t aken wit ho ut seeking p ro fessio nal ad vic e. No responsib il ity fo r lo ss by any p erson ac ting o r refraining from act io n as a resul t o f the m at erial in t his d ocum ent c an b e acc ept ed and we c annot assum e l egal l iab il ity fo r any erro rs o r om issio ns t his do cum ent may co nt ain. © H el io s - Feb ruary 2014 Al l right s reserved . www.askhelios.com firstname.lastname@example.org Head Office: 29 Hercules Way | Aerospace Boulevard | AeroPark | Farnborough | Hampshire | GU14 6UU | UK | F +44 1252 451 652 T +44 1252 451 651 Dubai Office: Dubai Silicon Oasis T +971 4 372 44 20 Žilina Office: | HQ Building - B302 | PO Box 341116 | Dubai | UAE | F +971 4 372 49 16 Vedecko-technologický park | Univerzitná 8498/25 | 010 08 Žilina | Slovak Republic T +421 905 477 081 Egis is an international group offering engineering, project structuring and operations services. In engineering and consulting its sectors of activity include transport, urban development, building, industry, water, environment and energy. In roads and airports its offer is enlarged to encompass project development, equity investment, turnkey systems delivery, and operation and maintenance services. With 12,000 employees, including 7,500 in engineering, and a turnover of €881 million in 2013, the group is present in over 100 countries and has around 50 offices in France.
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This paper explains how ATC services could be shared between airports and offers a collaborative model that airport operators can use to achieve it.
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