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SES Performance scheme: Progress or not? Viewpoints from the PRB

SES Performance scheme: Progress or not? Viewpoints from the PRB. Briefing to AVINOR 06 November 2013 Antero Lahtinen , PRB member. Topics. Performance-oriented approach Progress under RP1 (2012-14) Opportunities and risks for RP2 (2015-19) Conclusion. SES Performance scheme schedule.

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SES Performance scheme: Progress or not? Viewpoints from the PRB

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  1. SES Performance scheme: Progress or not? Viewpoints from the PRB Briefing to AVINOR 06 November 2013 Antero Lahtinen, PRB member

  2. Topics • Performance-oriented approach • Progress under RP1 (2012-14) • Opportunities and risks for RP2 (2015-19) • Conclusion

  3. SES Performance scheme schedule Monitoring

  4. Environment • Target on average horizontal en-route flight efficiency • last filed flight plan vs. great circle route  Slight divergence from planning, but on track.

  5. Capacity (1/2) • Target on en-route ATFM delays (2012): 0.7 min/flight  Performance better than target (lower average traffic) 0,70 0,63

  6. Capacity (2/2) - Norway 0,04 Norway 0,28 0,04 0,28  Target missed in 2012, mainly due to capacity/staffing issues during the Summer.

  7. Cost-efficiency 1/2 • Total costs lower than Performance Plans (-206 M€2009) • of which ~70% can be associated to structural changes. • EU-wide real en-route unit costs in 2012: +1.2% above Perf. Plans • Actual costs -3.3% lower, traffic -4.5% lower • Most ATSPs succeeded in retaining their surplus and even increased it in a context of traffic decline • Higher traffic and lower costs than planned in Norway in 2012 • Estimated surplus: 9% • Estimated RoE: 10.9%

  8. Cost-efficiency 2/2

  9. Capital Expenditure • Many investments planned in 2012 have been postponed or cancelled • CAPEX lower than planned in 2012: -340.7M (-31.2%) • Information sometimes incomplete and not always consistent • Mandatory implementation of Data and Interoperability delayed or not planned. • Norway’s actual 2012 CAPEX is missing, which makes an assessment at NEFAB level impossible and weakens the findings at EU level.

  10. What are the main performance issues? • Economy is slowing down • Highly volatile air traffic demand • Medium air transport punctuality (~83%) • Complex airport, users and ATM relationships • High ANS costs (800€/flight) • Low ATCO productivity • Fragmented Service provision & infrastructure • Labour intensive industry (63% of costs) • ANSP Monopoly, full cost recovery until 2011 • and also high delay costs… • Capacity and demand often don’t match • Social issues • Environmental impact • Safety issues? • No good risk indicators so far

  11. Total economic cost Flight-efficiency En-route: 2.0 B TMA, taxi: 1.8 B 3.8 B • ANS Total economic cost ~ €14B p.a. • Fully borne by users in Europe • Covers 3 KPAs • Environment, Capacity, Cost-Efficiency • Reflects trade-offs • Objective • To minimise TEC within acceptable boundsof safety and security TotalUser cost(ground) € 14 B ATFM Delays ER: 0.9, Apt: 0.5 1.4 B ATCO 2.4 B Support costs Other staff: 2.6 B Other oper.: 1.5 B 4.1 B UserCharges €9 B p.a. CAPEX Depreciation: 1 B Capital cost: 0.5 B 1.5 B 1 B Other costs EURO: 0.5 B MET: 0.4, NSA: 0.1 B 2011

  12. Opportunities for improvement Flight-efficiency En-route: 2.0 B TMA, taxi: 1.8 B 3.8 B • Efficiency gains in individual ANSPs (e.g. cost control) • Airspace improvements,(e.g. free routes) • More flexible management of capacity to match demand • New Technology • Rationalisation of and greater cooperation in service provision and oversight • The start of ANS restructuring through FABs or otherwise ATFM Delays ER: 0.9, Apt: 0.5 1.4 B ATCO 2.4 B Support costs Other staff: 2.6 B Other oper.: 1.5 B 4.1 B CAPEX Depreciation: 1 B Capital cost: 0.5 B 1.5 B 1 B Other costs EURO: 0.5 B MET: 0.4, NSA: 0.1 B 2011

  13. Proposed targets for RP2: Safety

  14. Proposed targets for RP2: Environment • Last filed flight plan and actual trajectory • Free route airspace

  15. Proposed targets for RP2: Capacity • PRB’s proposed target aims at maintaining the same quality of service. • Lengthy delays to be dealt within NSP and NOP

  16. Proposed targets for RP2: Cost-efficiency • The PRB proposes en-route costs reductions • -1.5% p.a. for 2015-2016 and -2.5% p.a. for 2017-2019 • Annual average reduction in en-route costs of -2.1% over 2014-19 • Less demanding effort at the beginning of RP2 to allow for required changes and adjustments • Draft EC decision: -2.5% p.a. over RP2

  17. Conclusions • Performance is the bottom line • Major change under SES II • Enforceable performance targets, incentives • Significant performance improvements in first step (RP1) • Low traffic has significant impact • Next challenge is RP2 targets

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