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What the CANSO Performance Report doesn’t tell you
Data from CANSO’s latest Global Air Navigation Services Performance Report indicates a worrying deterioration in the cost efficiency of Air Navigation Service Providers (ANSPs) worldwide. Over the period 2010-14, unit costs have increased for almost all of the ANSPs included in CANSO’s survey.
Not that you’d know this from reading the CANSO report, which is keen to highlight that the majority of ANSPs have reduced their unit costs in 2014 in the context of rising traffic. However, further examination indicates that unit costs are generally still higher than they were four years ago, and ‘majority’ actually means 56%.
In terms of overall cost efficiency – measured as average cost per flight hour – only three ANSPs improved their cost efficiency between 2010 and 2014 (NAV Portugal, the Latvian ANSP LGS, and Hungarocontrol). At the other end of the scale, seven ANSPs had increases in their unit costs of more than 5% per year, including the Ukrainian ANSP UkSATSE (annual growth rate of 16.2%), the Estonian EANS (11.2%) and the South African ATNS (10.9%).
As seen in the figure below, the increase in unit costs is generally due to an increase in both ATCO and non-ATCO unit costs. On average, ATCO unit costs – ATCO employment cost per hour of operations activity – increased by 5% per annum over the period. At the same time, non-ATCO costs per flight hour increased by around 3% a year on average. Only one ANSP surveyed, NAV Portugal, reported a decline both its ATCO and non-ATCO unit costs.
% growth in average cost per flight hour (Continental) 2010-2014
These findings are not concrete evidence that ANSPs are getting less efficient. However, they should be used as a conversation starter to understand why there is an underlying upward trend in ANSP costs and what can be done about it. For example, further analysis indicates that this may be a result of an increase in the cost of employing ATCOs.
The CANSO report itself sheds little light on why unit costs have been increasing since 2010, or indeed on ANSP performance in general, and is decidedly underwhelming. This is disappointing given the value a trade organisation such as CANSO can play in collecting benchmarking data, and disseminating the results in a way that can assist its members.
One of report’s weaknesses is that it is limited to 34 ANSPs (of which 15 declined for their individual data to be made identifiable or had missing data). Given that CANSO has 88 ANSP members, this would indicate that over 60% of them have little interest in understanding whether and how they can improve their performance.
The impact of the report is also undermined by the poor presentation of the benchmarking results. This makes the key results difficult to digest and provides no guidance on whether an ANSP is a relatively strong or weak performer, thereby undermining the value of the benchmarking exercise. Even after reading the report cover to cover, we still had to do our own analysis (shown in the figure above) in order to get a better understanding of ANSP performance.
We previously discussed the need for more effective benchmarking of European ANSPs following the disappointing results from the Single European Sky performance scheme. It seems this is a worldwide issue. Perhaps it’s time to reconsider whether ANSPs should continue to operate as monopolies. In the meantime, increasing costs usually mean only one thing: higher charges.
These findings are not concrete evidence that ANSPs are getting less efficient. However, they should be used as a conversation starter to understand why there is an underlying upward trend in ANSP costs and what can be done about it. For example, further analysis indicates that this may be a result of an increase in the cost of employing ATCOs.
The CANSO report itself sheds little light on why unit costs have been increasing since 2010, or indeed on ANSP performance in general, and is decidedly underwhelming. This is disappointing given the value a trade organisation such as CANSO can play in collecting benchmarking data, and disseminating the results in a way that can assist its members.
One of report’s weaknesses is that it is limited to 34 ANSPs (of which 15 declined for their individual data to be made identifiable or had missing data). Given that CANSO has 88 ANSP members, this would indicate that over 60% of them have little interest in understanding whether and how they can improve their performance.
The impact of the report is also undermined by the poor presentation of the benchmarking results. This makes the key results difficult to digest and provides no guidance on whether an ANSP is a relatively strong or weak performer, thereby undermining the value of the benchmarking exercise. Even after reading the report cover to cover, we still had to do our own analysis (shown in the figure above) in order to get a better understanding of ANSP performance.
We previously discussed the need for more effective benchmarking of European ANSPs following the disappointing results from the Single European Sky performance scheme. It seems this is a worldwide issue. Perhaps it’s time to reconsider whether ANSPs should continue to operate as monopolies. In the meantime, increasing costs usually mean only one thing: higher charges.