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Introducing Competition into Airport Towers: Not Only Possible, Beneficial
Advocates of ATM reform are like trams. Nothing for a very long time and then they all come at once. Whilst the ATM Policy Institute was launching its push to put ATM reform on the agenda, COMPARE, a consortium of research institutions (Transport and Mobility, Leuven, NOMMON Madrid, Hebrew University of Jerusalem and Slot Consulting Ltd, Hungary) presented a series of studies aimed at promoting competition in the provision of ATM services in the very same city. At the very same time.
The COMPARE studies are supported by funding from SESAR JU. You can see the benefit of that funding in the fancy name. It is a rule that all EU funded research projects need first to find a fancy name.
The COMPAIR workshop in Madrid presented the current status of their studies, with particular emphasis on the outsourcing of tower services. It reported on the experience to date of a number of European states that have introduced competition for tower services: Spain has contracted 12 towers to newcomers; the UK 3 towers to newcomers and 8 renegotiated with the incumbent, NATS; Germany, 14 regional towers to newcomers; Sweden, 17 towers to newcomers; and Norway is planning to outsource tower at Oslo’s second airport.
The main findings from the review of this increasing competition for tower services:
Competition reduces costs, with reductions of 50% or more achievable
Competition promotes earlier implementation of technology to gain service and/or cost advantage
The main driver for competition comes from privatised airports
Competition can be effective even when incumbent wins the tender but is forced to renegotiate and re-bid
Effective tender process requires all competitors to have full access to all relevant information
In principle, there is no reason why the experience of successful competition for tower services cannot be applied to competition for other ATM services. The sort of savings that COMPARE notes would seem to make that attractive.
However, there is a substantial difference. For other services, the ANSP will be the tenderer. It will have less incentive to introduce competition than a privatised airport.
The current charging structure for ATM services is the threshold issue. It affects the incentive for competition for tower services. If the ANSP charges the airport directly for tower services the incentive is strong; if the charges are direct from the ANSP to each airline operating at the airport, the incentive is substantially dispersed. Particularly if the airline does not see any advantage in demanding focused and personalised service. The airline might be able to argue for such service across its network, but only if the ANSP controls a significant proportion of that airline’s services. For many airlines in much of Europe, that is simply not the case.
One outcome is clear. Countries that have direct-to-airline charging arrangements for tower services need to introduce direct-to-airport charging arrangements if they wish to maximise the incentive for competition.
Competition will make the costs of providing tower services at each airport transparent and will expose any cross subsidy for services at regional airports. Whoops, the postage stamp rule. Governments will be wary of changes which expose such cross-subsidisation. The risk is increased charges or reduced services at some smaller, usually rural, airports. On the upside, it is a step closer to the get-what-you-pay-for; pay-for-what-you-get outcome that is the bedrock of sensible ATM service delivery.
Information on other studies by COMPARE can be found on its website: http://www.compair-project.eu/project.html
