On the 4th of July the USA celebrates the historic signing of the Declaration of Independence, the momentous event that saw the birth of the world’s most powerful nation in resistance to the British Empire.
Having spent the past 10 years living between Washington and London I find myself torn between the two with a foot in each camp and my head in the skies, ironic considering I work in air traffic management. So what better time for us to reflect on the subtle differences between the two countries, in particular the trend of ANSP independence that’s become a model to follow across the entire industry – and in the spirit of this holiday, I have been permitted to write this entry in US spelling!
Is ‘independent’ air traffic management the way forward?
Historically, air navigation services were owned, operated and regulated by the government. However, due to increasing financial strains, we have seen a growing trend over recent years for these services to be handled by a separate, self-supporting air navigation service provider (ANSP).
Many ANSP legal models exist in the world today, but the signing of the Chicago Convention that established ICAO in 1947 did not mandate a specific form; only that each state signatory would commit to providing certain ATM services in its own sovereign airspace.
It wasn’t until 1987 that New Zealand became the first nation to legally incorporate and spin off its air traffic services from its regulator, in order to improve its financial strains and allow it to independently operate as a government-owned business. This model has worked for governments across multiple sectors, and over the past many years the trend only seems to be growing.
Since New Zealand in 1987, 38 countries have commercialized their air traffic services, handing over accountability of the service provision to a fully or partly independent ANSP. This ANSP operates as a commercial business, generating its own revenue from charging users for flying in its airspace, and making its own strategic, operational and financial investment decisions, all under strict regulatory compliance.
There is no one-size-fits-all framework for a value-driven ANSP, and success depends on a cooperative relationship between the objectives of the service provider, the regulator, the union, and the needs of its airspace users to ensure that it is mutually beneficial.
Different countries have successfully implemented different legal models, from the Canadian not-for-profit model, the Australian, New Zealand, and German government-owned corporations, to our own public-private partnership model, all of which have driven higher safety standards and efficiencies in costs and performance.
In the USA, the Air Traffic Organization (ATO) was spun off from the FAA as a performance-based ANSP in 2003, but is still under tight budgetary control by the US congress, where annual appropriations are released on a line-by-line basis, limiting its ability to make long term investments for programs that fall under the umbrella modernization scheme referred to as NextGen.
The US congress funds the FAA in its entirety (ATO included) from two different pools – the Airport and Airway Trust Fund (AATF) and the General Fund. The Trust Fund is a collective pool sourced by user fees, and was designed to finance investments in the airport and airway system and, where funds were available, to cover the operating costs of the airway system. However, in recent years the AATF has sought additional funding support by the General Fund (sourced by general taxpayers).
A government owned and controlled service allows budgets to be managed more simply, and the absence of commercial tension removes any distraction from the existing operation. However, the notion of introducing a market environment is being seen as a favorable move in more and more countries as they search to unlock efficiencies – both political and operational.
Our experience and the value of safety
NATS became a public-private partnership (PPP) in 2001, with the UK government holding the largest share (49%) and nominating a consortium of airlines, The Airline Group, as its strategic partner, which owns 42%. The PPP was debated hard by politicians who feared that a privatised ATM company would put profit before safety. But safety is our core business and it always comes first. Our performance since 2001 in improving and maintaining safety at the same time as growing our business demonstrates that commercial drivers and safety can sit comfortably together.
We have also massively improved punctuality, achieving 99.9% over the past year – NATS-attributable delays are currently 10x less than the European average despite handling more aircraft movements at London’s five airports than any other city besides New York and Chicago.
Being able to manage our own financial planning has allowed us to invest in modernizing our service with research into new technological and operational developments. This has allowed us improve safety and efficiency and reduce excess fuel usage, leading to substantial improvements in environmental performance and reduction in fuel costs for our customers.
Commercialization has become a powerful catalyst for driving efficiency and promoting collaboration with users. More importantly, it transforms the organization into a culture that is motivated to achieve benefits under rigorous performance targets.
I understand that moving from a state-owned to a more independent operation is an extremely complex issue with each situation facing its own unique set of influencing factors and variables. For me however, I’m extremely happy to find myself in an ANSP which has followed the PPP path and is experiencing the benefits. The future in our ‘state of independence’ is bright.
Find out more
Take a look at our latest Annual Report to gain an insight to how NATS is performing as a public-private partnership. You can also download a brochure we produced last year ‘NATS – 10 years as a Private Company‘ for more information about our PPP journey.
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