Minimum levels of ATM service need to be State protected – for the rest, the market should decide

Pictures of the IATCC building (interior and exterior) and pictures closely connected with the services ANS CR provides.

Jan Klas is Director General of Air Navigation Services of the Czech Republic (ANS-CR) and has recently retired as

Jan Klas, generální ředitel Řízení letového provozu, Ekonom Příloha PwC, Jeneč, 8. 12. 2017

Director General, Executive CEO Committee Chairman of the Civil Air Navigation Services Organisation (CANSO).  He was recently interviewed by Philip Butterworth-Hayes to provide some insights to the topic of ATM levels of service required in our industry.

Q – This interview is taking place a few days after you have left your positions as EC 3 Chairman, which means you have the freedom to express you personal opinions somewhat more widely than before. So let’s start by asking how can we improve relationships between aviation stakeholders, relationships which been marred as a result of public comments that some stakeholders have been bearing a heavier load than others during the COVID-19 pandemic?

A – In the aviation industry we have excellent gardeners but most of them are active in gardens other than their own. Many associations have quite strong opinions about what others should be doing, how others should be reformed, but they do not explain exactly what they want to do and how they want to do it. And this is further complicated by the fact that for many it’s a question of punch hard and overstate your claim, because that’s the only way to get anything done – after all, everyone else is doing it.

In terms of communications in many instances in Europe we are not just dealing with one airline association, but several.  And from the air navigation service provider (ANSP) sector I don’t think we have found a consensus on how we see the future of the European ATM.

A further problem is that the European Commission prefers consultation to direct action. They believe the more stakeholders there are in a workshop, the better it is. But that is not always the case. It’s impossible to address a single problem, like the current crisis, in this way.

Q – What is the solution to improving communications?

A – I’ve been working very hard within CANSO to get all associations to become more clearly focused on how they want to organise their business and then how they want to contribute to more conceptual matters which can be translated into a legal framework. If we are to develop a new European ATM long-term concept we need to have a couple of leaders responsible and accountable to their members, institutions and companies to sit and develop draft proposals. Only with a limited group of people can you develop something that is meaningful.

You can hardly expect this from the European Commission because they don’t have the expertise.  Consultation can’t create a new concept or legislation.

Q – Can we sort out the recovery of the aviation industry using the current institutions and dialogue process, or do we require something completely different, and if so, what?

A – I have always been quite critical to the current (performance) scheme and I’ve always tried to change it but in this unprecedented crisis we must use existing legal frameworks for the recovery. But how are we going to recover? Some people think we should use this framework but others want to modify it because cash is missing everywhere, for each and every stakeholder. I think we need stability and we should design a regime for the next two years and then work out how we should apply risk sharing mechanisms post 2022. Otherwise aviation may collapse.

The crisis has also revealed the industry’s fault lines – in some countries ATM services are very much connected with State structures but in others ANSPs are considered as commercial entities. In this crisis situation we can also see differences in the way States are reacting – some are ready to provide significant support to ANSPs while others insist ANSPs must rely on commercial loans, relying on risk-sharing mechanisms and later recovery of the losses from this year.

We cannot change this in the middle of a crisis but at some future stage we will need to develop a concept which is consistent. We will also need rules which are generally applicable to all European member States.

Q – Does this mean that recognising air traffic management provision is a critical infrastructure which has to be ring-fenced no matter what’s happening in the market?

A – All ANSPs want to have management autonomy. We want to have all the benefits associated with running a company as a business during the good times – but when the bad times come immediately start referencing the Chicago Convention and our role as providers of critical infrastructure which has to be State supported.

For the future concept, we will need consistency. Critical infrastructure, State responsibility, sovereignty, all have to be considered – along with a minimum level of service. But I am also a supporter of competition and the commercial approach. I think these two approaches can be combined, for example, by designing some minimum level of service which will be guaranteed to the States, for which, of course, strong monopoly regulation would be applied.

And then, for managing the remaining capacity, especially in the face of traffic growth, this should be traded. It can be traded without any monopoly restrictions and will be simply driven by competition. Of course, you will need some transition, but that is something that I would like to see in future because this could address both concerns. You design some minimum level of service but with the additional capacity that can be provided by the most efficient operators.

It would mean ANSPs would be forced to created bigger entities, bigger alliances and more value added services. That would be an ideal scenario – after the crisis.

Q – How close are we to losing an air navigation service provider in Europe? Is that a real threat?

A – We shouldn’t end up in the situation that bigger ones survive merely because they are big. Because today in this environment they are not more efficient than smaller or middle-sized ANSPs. I don’t suggest that anyone should disappear from the ATM map – they can still provide what I have defined as a minimum level of service or a level of service which should be guaranteed by the State – but I would argue that those who are not able to provide sufficient capacity in an efficient way should be replaced by those who can.

Q – How best should we then coordinate proposed methods of recovery?

A – We shouldn’t just go for a cost containment activity without having a strategy; the crisis recovery programme must feed into our long-term strategy and long-term vision. That’s our approach. And I define two major principles for this what I call “strategy for crisis”: scalability and resilience.

Downsizing is important at the moment but we must also be able to react to an increase in demand when it’s needed. So we must be scalable in both directions. And once we are through this pandemic crisis aviation will be confronted many other challenges, such as those posed by the green agenda.

Q – But if you have long-term fixed costs how do you manage that?

A – In the ATM environment our most important fixed costs are our air traffic controllers. But we can reduce our expenditure here by cutting overtime and being more flexible in the way we apply variables which have traditionally been connected with performance. We can use these tools for downsizing and upsizing. But of course we still need to protect our workforce; we want to keep their abilities to provide services at a safe level, so we continue to provide training and other services.

With other categories of staff we have learned that it’s possible to work online and we will try to offer some flexible packages so staff will be able to combine part-time jobs with home office work. All these elements will be further explored, and we want to be more scalable.

Q – How do we develop a coordinated response to the recovery from a European Union level and a state level that balances the interests of all aviation stakeholders?

A – In terms of the proportionality between various stakeholders like airports, ANSPs and airlines it’s important that we avoid a situation where somebody is getting unjustified help from the government and thereby gaining a competitive advantage.

Proportionality is very important. Here in Czech Republic this issue is being discussed very intensively and there are many different opinions. But I believe the airlines based here – Smartwings and Czech Airlines – should get a comparable size of support to other airlines in Europe, and that’s the only way.

It should be simple, proportional, quick. These are the three major elements. Aviation has historically not been subsidised by the governments and I hope that we will return to this soon.

 

2 Comments

  1. I agree with a lot of the article. Spare capacity with workforce needs new solutions but pensions and high salaries means taking cuts that unions won’t let you so the bill still remains and governments won’t bail you out. ANSPs have to like pilots make redundancies or the whole lot falls over and the Customer finds a cheaper option because they are in the same mess too

  2. this may be a good start – Posture future ATM services – then work back from there

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