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Competition > Efficiency > Safety: ATM Competition in Australia (and the USA)

June 20, 2017

 

In this article I will make the case that competition leads to improved safety. Don’t misunderstand me, Airservices Australia does a good job. But they would be better still if they had some competition to sharpen them up.

 

There is a great deal of discussion about the privatisation of the FAA Air Traffic Organization (ATO) at the moment. If you may be involved in, or affected by, the privatisation of the ATO, then this article might be of interest to you.

 

You can also read my article: FAA ATO - Privatisation Doesn't Go Far Enough! and other blog articles on my website www.thecrom.com.

 

Competition drives efficiency

It is generally accepted that competition improves efficiency, quality and service.

 

In the airline sector of the aviation industry, for example, competition causes airlines to drive down costs and ticket prices, and improve service (flight frequency, scheduling, on-time-departure, seat pitch, in-flight meals, entertainment, lounges). 

 

Efficiency drives safety

I contend that improved efficiency also brings improved safety.

 

Implementation of a systematic approach to an activity like air traffic management (ATM) results in improved repeatability, fewer exceptions to the rules and a more consistent traffic flow. Standardisation of routes allows the route designers to build-in separation between different tracks and relieve the controllers of the necessity to separate aircraft on adjacent routes. Automation of activities and introduction of systematic processes and procedures also result in improved track-keeping accuracy, situational awareness and increased confidence in the system.

 

With all of these comes a predictability which will help controllers move more traffic, more efficiently.

 

Importantly, predictability will also allow them to move traffic more safely.

 

Competition in the Air Navigation Service Provider (ANSP) Market

Some think that introducing competition into the ANSP market is, in some way or for some reason, not possible. The argument is that a private company will cut safety corners to make more money. Let’s just get the safety issue out of the way up front.

 

When the National Air Traffic Services was about to be privatised in the UK there was a call from some quarters that, “privatising NATS will reduce safety! The management will cut financial corners and ATM will become unsafe!”

 

British Airways was government owned, is now privatised and has an impeccable safety record. Safety regulation of British Airways is carried out by the UK Civil Aviation Authority (CAA).

 

The CAA is the same body that carries out the regulation of NATS, formerly a government owned enterprise, now a majority-privately-owned ANSP. NATS has an impeccable safety record. Privatisation of NATS has seen no diminution of safety standards.

 

Quite the opposite, as I shall show – safety standards have improved since privatisation.

 

The UK experience is that a true, competitive market can be achieved within that part of the ANSP industry catering to the aerodromes (aerodrome and approach ATM): there are several ANSPs operating such services in the UK.

 

For example, some aerodrome operators like Heathrow Airport Holdings Limited contract out the provision of their ATM to an ANSP (eg NATS Services Ltd (NSL) - a subsidiary of NATS), some like East Midlands Airport, which is operated by Manchester Airports Group, employ their own controllers

 

As examples of the competitive market in action, the contract for ATM at Gatwick transferred from NATS to DFS on 1 March 2016 and at Edinburgh will transfer from NATS to DFS in 2018. Birmingham allowed its contract with NATS to expire and started providing its own air traffic services in 2015.

 

However, when it comes to en-route airspace the UK believes that only one (monopoly) ANSP can provide ATM – at present this is NATS (En Route) plc (NERL), a subsidiary of NATS.

 

The wish of the UK government to have a competitive market is fulfilled by the CAA acting as a virtual competitor to NERL. The CAA is not only the safety regulator but the Transport Act 2000 gave the CAA the role of economic regulator as well.  Therefore, the CAA can set financial incentives to NERL to drive efficiency.

 

The CAA established a committee which comprised staff from both the economic and safety regulatory parts of the organisation to ensure that financial incentives did not have adverse safety outcomes.

 

Aerodrome Operators

One might think that aerodromes are monopolies. Regional aerodromes exist in a specific geographical location and serve their local population. Why would a person drive past their local aerodrome to fly from another aerodrome further away? Competition, that’s why. It may well be that the flight to the chosen destination, at the preferred time, by a better operator is from the more distant aerodrome.

 

The UK is geographically small but has quite a high population density so many aerodromes compete almost directly:

Glasgow/Edinburgh/Prestwick,

Newcastle/Teesside,

Liverpool/Manchester,

Manchester/Leeds Bradford,

Leeds Bradford/Sheffield City (Sheffield closed as a result),

Belfast International/Belfast City,

Birmingham/Coventry (Coventry closed as a result),

Cardiff/Bristol,

Plymouth/Exeter,

Southampton/Bournemouth,

Gatwick/Heathrow/Luton/Stansted/London City

 

On a global scale:

Heathrow/Paris/Frankfurt/Amsterdam,

Dubai/Doha/Abu Dhabi

and so on.

 

Therefore, it is crucial to the UK aerodrome operators that the air traffic services provided at their aerodromes are safe and efficient. The aerodrome operators drive their ANSPs to deliver particular levels of service in an endeavour to ensure the ANSP is not the choke-point in the system.

 

I contend (without knowing what is in the contracts), that the operators can write contracts to deliver a service such as a minimum number of movements per hour at busy periods. They don’t need to specify safety performance indicators.  The aerodrome operators are regulated by the CAA and they know that the ANSPs are as well – the CAA is responsible for ensuring that ATM is provided to safety standards which are acceptably safe.

 

ANSPs at aerodromes are aware that the service provided may have an impact on the survival of the aerodrome, or at least, on their continued tenure of the contract.

 

Therefore, it is a good incentive to them to provide an efficient and safe service.

 

Aerodrome ANSPs

When it comes to contract renewal time, the incumbent ANSP does not want their aerodrome operator to think that the last ANSP they will have is the one they’ve got now. The possibility of losing a contract provides a strong incentive for the ANSP to provide a comprehensively good service.

 

Some ANSPs work hard to improve the standards of service they provide at aerodromes. I’m sure within this there is a thought that if they can increase the throughput at busy times this will stand them in good stead when it comes to contract renewal.

 

For example, NATS first broached the subject of Time Based Separation on final approach to me back in the early 2000's when I worked for the CAA. It was also discussed at the NATS Wake Vortex Working Group on which I was the CAA’s representative. It took some time to get into service but it was introduced at Heathrow in March 2015 and has exceeded expectations. 

 

Since its introduction Heathrow has seen a 62% reduction in headwind related arrival delays, 115,000 minutes less airborne holding per annum, 0.8 average extra landings per hour in all wind conditions and 2.6 average extra landings per hour with a headwind greater than 20 knots.

 

All that effort over many years. Why would you bother if you don’t have to? Because it should have a significant impact on the aerodrome operator who, the ANSP hopes, will be suitably grateful when it comes to contract renewal.

 

In a non-competitive environment there is no incentive for the ANSP to do this work.  In Australia the Civil Aviation Safety Regulation (CASR) Part 172.024 states that there are only 3 eligible providers of air traffic services: the Commonwealth (ie the Department of Defence), Airservices Australia (AA), or an organisation in cooperation, or by arrangement, with AA.

 

Defence can’t and won’t provide services at civil aerodromes. AA will not authorise another provider. Therefore, AA has a monopoly position enshrined in law. 

 

AA is a wholly government-owned enterprise. It has a Chief Executive Officer who reports to a board of directors. However, ultimate control of AA rests with the Federal Minister for Infrastructure and Transport.

 

Apart from a desire to provide a professional service, it doesn’t matter to the controllers whether they land 48 aircraft per hour or 49, or only 40! AA will not lose the contract and the controllers are not going to lose their jobs to a competitor because no other organisation can take over provision of ATM. It says so in the law!

 

The aerodrome operator cannot even place performance incentives on the ANSP because they have no choice about who is the ANSP.

 

The UK experience of competition in the market is that the ANSP’s view of safety and the world can become more outward looking.

 

They become better engaged with their external stakeholders especially on risk. They recruit new people with new ideas from non-aviation backgrounds bringing different cultures. They sometimes start working with others who cause risk even where the ANSP doesn’t control that risk. For example, the ANSP knows that it will be criticised and receive bad publicity if there is a mid-air collision between a locally-based aircraft and an aircraft from an adjacent aerodrome, even though it may have been outside their controlled airspace and had nothing to do with that ANSP.

 

Airspace Incursions (AI) (aka Airspace Infringements), where a pilot enters controlled or restricted airspace without permission, are generally the fault of pilots not the ANSP. However, ANSPs know that there would be a risk to their business if an AI led to a mid-air collision so they are expending more effort trying to reduce AI.

 

ANSPs know that poor safety performance is a significant risk to their continued existence in business. Therefore, they are increasingly turning to data collection to produce safety performance metrics against which their performance can be measured. From analysis of these data, decisions can be taken on how to make improvements to the system.

 

Some of the more advanced ANSPs’ business practices have now become a balance between safety, efficiency and environment. Safety has become just another business attribute that must be managed along with the others to fight off competition and keep the business successful.

 

ANSPs have come to understand their businesses better and this must, partly, be due to the incentive provided by competition – they don’t want to lose their contracts!

 

En-Route ANSP Competition

NATS was privatised in July 2001. According to the NATS “Media Centre” on its website, the average delay per flight attributable to NATS in 2002 during the period February to May was 132.1 seconds on 451,984 flights. February to May is arguably the quietest period of the year and the delays should be at their minimum.

 

By comparison for the same period in 2012 the delay was 1.4 seconds per flight on 497,187 flights.

 

According to the NATS Annual Report for 2016 the full-year figures for 2016 are 4.3 seconds delay per flight (en route delay attributable to NATS) on 2,278,000 flights handled with zero risk-bearing Airproxes (attributable to NATS)       .

 

What can be done in Australia?

Firstly, the argument about private operators cutting safety corners that didn't apply in the UK with British Airways and the CAA is equally invalid in Australia: Since privatisation QANTAS has maintained one of the finest safety records in the world and is regulated by the Civil Aviation Safety Authority (CASA). AA is also regulated by CASA.

 

My choice would be to introduce some proper competition into the Australian ATM market. There are several models around the world that could be investigated.

 

There is a feeling in Australia that competition would not work because the splitting up of the various air traffic control (ATC) towers into single business units would result in none of them making money or, conversely, charging exorbitant rates to stay in business.

 

The market would not be among small operators with one or two towers or “controller buy-outs” of their own ATC unit; it would be between the big players in international ATM with the economies of scale and experience to contract into several units.

 

If nothing else the Department of Infrastructure and Regional Development and the Australian Competition and Consumer Commission should start challenging AA as a virtual competitor.

 

When the system reaches a ‘steady-state’ of a certain level of delays and incidents, and this has become the accepted norm, and there’s no incentive to improve:  Try competition.

 

Think you have done everything possible and your risks have been driven As Low As Reasonably Practicable (ALARP)?  Try competition.

 

Want to take the safe, orderly and expeditious provision of the ATM another step forward? Try competition.

 

Competition > Efficiency > Safety

I am not suggesting that competition is solely responsible for improving safety. There have been major improvements, for example, from the implementation of safety management systems and new technologies – ADS-B, short and medium-term conflict alerting, Maestro, Metron and so on – lots of great improvements.

 

I am also not suggesting that AA is doing nothing to improve: The organisation states in its Annual Report 2015-16 that it is making great efforts.

 

The CEO, reports (on page VIII), “We were not operating as efficiently as we should” and goes on to say that a new operating model designed to match AA’s commitment to safety, “with a customer-centred and commercially rigorous approach to business” is to be introduced. This is admirable and I applaud it.

 

My point is that it is one thing to have a commercially rigorous approach to business but it is quite another if that rigour is driven by a genuine competitor trying to take large chunks of your business.

 

What I am suggesting is that no matter what AA are doing now, how much more could they do if true competition was also a driver?

 

Improvements in safety in the Australian ATM system could be achieved if AA became more efficient.

 

The experience of the UK has shown that the government can act as a virtual competitor to drive the behaviour of the monopoly ANSP in both efficiency and safety.

 

I believe that the Australian Civil Aviation Safety Authority should investigate the feasibility of creating a virtual competitor for AA in collaboration with the Department of Infrastructure and Regional Development and the Australian Competition and Consumer Commission.

 

Competition improves safety.

 

 

 

Peter Cromarty

 

Peter Cromarty is a former air traffic controller and pilot. He spent 27 years as a safety regulator of ATM/CNS, airspace and aerodromes.

View his Linked In profile

 

If you've read this far and you are still wondering where the tower in the heading photograph is: Karratha, WA, 2008 before it was refurbished.

 

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