Reducing costs in small airport ATC through shared services

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Presentation at the Airfield Operations Conference, April 2014
Presenter: Steve Leighton of Helios
steve.leighton@askhelios.com
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Reducing costs in small airport ATC through shared services

  1. 1. www.askhelios.com Management and technology consultantsManagement and technology consultants Steve Leighton 16 April 2014 Reducing costs in small airport ATC through shared services
  2. 2. 2 Many small airports are facing a tough time economically
  3. 3. 3 ACI continue to show that small airports are vulnerable On average 42.5% of Europe's airports are loss making… • …but 75% at EU airports with less than 1M pax Net profit margin at these small airports is minus 6% Return on capital invested is on average minus 1.8% • +3.5% average for all airports • increases to +13% for 1-5M pax 93% of total airports worldwide are sub 1M pax Source: ACI Economics Report 2013
  4. 4. 4 Some places obviously struggle more than others… Passenger traffic versus profitability for Spanish Airports (2010) Source: AENA
  5. 5. 5 Operating costs per passenger are significantly higher at lower levels of demand
  6. 6. 6 This is, as we would expect, an industry with clear economies of scale Passengers Revenue Costs Breakeven Large fixed or ‘inelastic’ costs Economies of scale achieved here Airport making loss Airport making profit
  7. 7. 7 ANS costs can be a significant element of an airports costs 9% 20%8% 16% 21% 10% 17%  International flight  Typical load factors  Day time flight Dash 8 Q-400 landing, passenger and ANS costs
  8. 8. 8 Whether the costs of ATC fall directly on the airport depends upon the institutional model where you are… ATC costs Airport costs User charges ATC costs Airport costs User charges ATC costs Airport costs User charges Aeronautical charges Aeronautical charges Landing or terminal navigation charges Cross subsidisation from en- route or terminal fees Aeronautical charges TWR … increased liberalisation (together with regulation) in the UK market has led to a move towards the first model Risk Demand impact Risk impact
  9. 9. 9 Even a small tower at a small airport might require upwards of 30 staff depending upon opening hours Tower controllers – up to 10 Assistants, engineers, managers and admin – up to 10 Approach controllers – up to 10 Informal estimates suggest ATC can sometimes represent 50% of small airport operating costs  Number of open positions  Shift patterns  Synergies between approach and tower  Training  Vacation  Sickness Photo:MikePennington Factors influencing head count
  10. 10. 10 So what are the opportunities to reduce costs? Compete your ANS provision Reduce staffing costs • Reduced opening hours? • Reduction in service? • Reduction in training? Reduced capital investment • Risk of outages • Rising maintenance costs • Outdated technology • Lack of regulatory compliance  Perceived credibility of airport to airlines  Staff morale and retention  Attracting new recruits Impact
  11. 11. 11 Relatively small steps toward sharing services and costs could lead us towards a more cost effective future Shared services – a concept to save money and improve quality Two innovations are required: • A (minor) technical innovation • A business innovation
  12. 12. 12 Some small airports already share their approach control services In the South of France, the Montpellier operational unit provides approach control service to four commercial airports • 24 hour service • Montpellier, Nîmes, Béziers and Perpignan • Within a controlled airspace of 150 Nm x 100 Nm • In place since October 2013 Controllers at Cardiff airport in Wales provide approach radar services to MOD St Athan nearby Also bigger scale examples such as London Terminal Control and US TRACONs
  13. 13. 13 A shared approach control has been in place at Liverpool (UK) since 2006 Robin Hood Airport - 110 miles away Looking for cost reductions Challenges included: • Rostering and holding validations for three positions • Data and communications system design Decision not to use cutting edge technology in order to simplify regulatory approval Took 6 months to implement and gain regulatory approval
  14. 14. 14 The benefits are being obtained on an on-going basis Combined facility works well • Controllers appreciate the variety offered by an additional position Existing 24H aerodrome and radar operation required needs • 15 radar controller • 5 Aerodrome controllers • 10 assistants Remoted operation needs • 10 Aerodrome controllers (+5) • 7 radar controllers (-8) • 6 assistants (-4) Additional costs negligible Combined approach control
  15. 15. 15 Remote Tower services are also starting to appear on the market Remote Tower centre Video images of airport A technological innovation to allow entire Tower Control to be conducted remotely
  16. 16. 16 Sundsvall Remote Tower Centre in Sweden is due to become fully operational soon
  17. 17. 17 “The champagne is on ice…”
  18. 18. 18 Remote towers are perhaps the most innovative development in airport ATC in 30 years Ideal for low complexity and traffic environments Other enhancements include object tracking and labelling More complex sensor suite available, but maybe not economic at smaller airports Clearly requires a range of safety, operational & commercial issues to be addressed
  19. 19. 19 There are many ways in which an airport could transition to shared services An example 2-step transition could be appropriate Step 1: Move the approach controllers to a shared ATC facility Step 2: Move the tower controllers into the facility using remote towers
  20. 20. 20 Assuming a sizeable cost saving is required for each airport to justify the transition, could it work? Measured over the lifetime of the project
  21. 21. 21 There are potentially many benefits of a shared ATC facility for smaller airports Addressing staffing issues • Overcoming recruitment, retention problems • More staff development options • Easier rostering Improvements in service • Centres of excellence for APP & TWR • Critical mass for implementing new developments • Reduced reliance on individuals
  22. 22. 22 Understandably there are many considerations to be addressed with both remote approach and towers, e.g. How to transition existing service provision arrangements into the new organisation? • Existing ANS provider? • Establish a new provider? How to maintain control over the ANS provider once centralised? • Ensure not creating a new monopoly • Ensure not disadvantaged by future airspace and service provision decisions • Ensuring the provider focuses on cost control How to mitigate transition costs as far as possible? • Timing of transfer • Existing facility (whose?) or new facility
  23. 23. 23 Fortunately, there are some relevant examples in the aviation domain such as CUTE CLUBs Buying Club Airport #1 Airport #2 Airport #n  CLUB makes single procurement  With common specification/SLA  Fairly long duration contract  Members contract to the club  Monthly fees in proportion to usage  Capital costs paid by supplier  CLUB are not-for-profit. Benefits are shared with members. A CUTE Local User Board (CLUB) is an arrangement in which the airlines make the decisions on how the CUTE system will be paid for, operated, and maintained, for the benefit of all the CLUB members.
  24. 24. 24 How could small airports (and ANS providers) move forwards with this idea? 1 • To identify suitable airports to participate in the buying club 2 • To develop the specifics of the concept for the airports concerned 3 • To prepare a business case to evaluate the concept 4 • To develop an outline agreement for the buying club 5 • To identify key risks and prepare risk management plans 6 • To engage early with the national Civil Aviation Authority (CAA) Potential next steps
  25. 25. 25 The passenger experience has changed dramatically in recent years and continues to evolve
  26. 26. 26 An unmanned aircraft lands at a small public airport with an unmanned tower
  27. 27. www.askhelios.com For regular updates follow us on www.askhelios.com For regular updates follow us on Management and technology consultants Steve Leighton Director Tel: +44 1252 451 651 steve.leighton@askhelios.com

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