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Neil Gordon President of CAeM MetService, New Zealand

Cost Recovery for Aeronautical Meteorological Services WMO Region V Seminar on Cost Recovery and Administration Vava’u Kingdom of Tonga 1-5 December 2003. Neil Gordon President of CAeM MetService, New Zealand. Why Recover Costs from Aviation?.

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Neil Gordon President of CAeM MetService, New Zealand

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  1. Cost Recovery for AeronauticalMeteorological ServicesWMO Region V Seminar on Cost Recovery and AdministrationVava’uKingdom of Tonga1-5 December 2003 Neil Gordon President of CAeM MetService, New Zealand

  2. Why Recover Costs from Aviation? • Historically aviation has been a significant user of meteorological services, so appropriate that they pay • Legality, policy and guidance from: • Chicago Convention on International Civil Aviation (Article 15) • Annex 3 to Convention, which defines services provided or arranged for by Designated Meteorological Authority • ICAO Doc. 9802/4 “Statements by the Council to Contracting States on Charges for Airports and Air Navigation Services” • ICAO Doc. 9161-AT/724 “Manual on Air Navigation Services Economics” (Appendix 6) • Additional WMO guidance prepared by CAeM: • WMO-No. 904, “Guide on Aeronautical Meteorological Services Cost Recovery”.

  3. What are the Principles? • WMO Guide provides a “how to” of principles, including assessing costs of providing aviation services (en-route and terminal area usually separated) • Although ICAO principles strictly apply to international aviation only, same approach used for domestic • Considered appropriate to include both “direct costs” of providing services to aviation, and a share of “infrastructure” costs • Global “Conference on the Economics of Airports and Air Navigation Services” was held from June 19-28, 2000, in Montreal - re-affirmed that this was appropriate • ICAO - Air Navigation Services Economics Panel (ANSEP) has been reactivated to review policy and principles.

  4. How Does Aviation Benefit? • “He who pays the piper calls the tune” • Aviation pays - aviation is the customer, and has the say • Services specified for (and will be delivered) as required • Provides less vulnerability to uncertain government funding • Need transparency and consultation on costs and services - may lead to efficiencies as well • Relatively small cost (compared to otheraviation costs such as fuel, etc.) forcertainty and responsive service(only aviation-related, not subsidisingother services).

  5. Life Used to Be Much Simpler 50 Years Ago

  6. Now Many More Players and Entry Points

  7. CAeM Is Actively Involved

  8. Cost Recovery and WMO Sixth LTP • “Assist Members in the implementation of cost-recovery and other changes to national service arrangements • Guidance and assistance will be provided to Members undergoing review of their national arrangements for aeronautical meteorological service delivery, including the implementation of cost recovery • WMO will participate in the re-activated ICAO Panel (ANSEP) dealing with cost recovery matters” • Subject to funding, additional costrecovery seminars in variousRegions on aviation cost recovery.

  9. 2003 Survey on Cost Recovery • 102/187 Members replied by end of July • 71% of NMSs are the Designated Met Authority (DMA) • compared to 78% in 2000 • 86% of NMSs are the Met Service Provider.

  10. Who Recovers Costs? • 59% of Met Service Providers recover costs • Of those that don’t … • 55% planning to • 38% considering it • Those that recover costs say 24.7% of revenues from aviation • Those that don’t, say that 40% of budget is on aviation.

  11. “Single European Sky” • Expected to apply from January 2005 • Separation of service provider from service regulator • State will be able to designate an exclusive service provider • Authorised provider in one State will be able to operate in another State, if they haven’tdesignatedan exclusive service provider.

  12. States are Sovereign • ICAO Doc. 9802/4 - Statements by the Council - Statement 35(ii) • “It is for each State to decide for itself whether, when and at what level any air navigation services should be imposed, and it is recognised that States in developing regions of the world, where financing the installation and maintenance of air navigation services is difficult, are particularly justified in asking the international airlines to contribute through user charges towards bearing a fair share of the cost of the services”.

  13. A Cost Recovery Framework • Letter to all Permanent Representatives from SG on 28 April 2003 provided an attached document prepared by CAeM, entitled “Implementing a Cost Recovery Framework for Aeronautical Meteorological Services” • Covered the key issues and providedsuggestions to PRs • First step in any country is to ascertainwhat entity is the DesignatedMeteorological Authority (DMA) as thisplays a critical role in terms ofinternational obligations.

  14. Three Components of the Framework • Service Delivery • Revenues • Revenue Distribution.

  15. Service Delivery • Needs continuing consultation among stakeholders • Clear agreement on what services are required, including those meeting international obligations, and who is providing them • An agreement should include • Deliverables • Frequency and timing of information • Standards to follow • Performance measures • Payment schedules • Dispute resolution procedures.

  16. Revenues • Charges need to be based on costs of providing the service • Need an inventory of facilities and services needed to service the different user/customer communities • Costs and human resources needed to carry them out • Fair share of infrastructural costs as well as direct costs • Use guidance from ICAO and WMO documents • Could be simple for small NMS, and very complex for large one • Then need method for allocating charges to different airlines and airplanes (en-route, terminal, plane size) • Efficient mechanisms for collecting the revenues implemented • All must be transparent and in consultation amongst stakeholders.

  17. Revenue Distribution • Life is more complicated now, with more entities involved • It may be necessary to enter into contractual agreements with all parties for appropriate redistribution of revenues • Again needs consultation and agreement • Appropriate that a portion of charges is identifiedto assist in maintaining the basic national infrastructure and international frameworkupon which aeronautical meteorologicalservices are founded • Particularly if the NMS is neither the Designated Met Authority, nor the service provider.

  18. Aviation Meteorological Services And Cost Recovery in New Zealand • Focus of approach in most guidance and in workshops is on cost recovery mechanisms used for “bulk” recovery from aviation users • Easiest to implement in terms of practical recovery of money • But doesn’t have direct customer link • New Zealand system is different (not being proposed for your use - purpose is to provide information on a different model) • In New Zealand it works like this ….

  19. New Zealand Met. Environment • Ministry of Transport sets policy, administers Meteorology Act, arranges for provision of Core Services • MoT Contract for Core Services • Core forecasts and data on Internet web site (http://www.metservice.co.nz) • Aviation Met. subject to Civil Aviation Rule Part 174 • CAA is designated Met. Authority for ICAO • Rule is intended to ensure aviation safety • Services provided on wholly commercial basis • Individual customer contracts • Clear separation of Core Services from Aviation Services.

  20. Purpose is aviation safety through following quality standards Covers: Personnel and training Sites, facilities and communications Records, manuals Quality assurance procedures Regular audits carried out High standards required Underpinned by principles of ISO9001. CAR 174http://www.caa.govt.nz/Rules/part_174.htm

  21. Separate Business Division (not part of NMS) Customer focussed - aviation literate forecasters, separate forecasting section Competitive - other suppliers can also be certified under CAR Part 174 Regularly negotiated commercial contracts with customers - service oriented Domestic airlines International airlines Air Traffic Control (Airways Corporation of NZ) Royal NZ Air Force Around 25% of overall MetService revenues. MetService Commercial Aviation

  22. Aviation Weather is for Aviation Customers - must meet their needs, efficiently and effectively Entirely appropriate that Aviation Customers pay a fair amount for the work which benefits them Whatever the means of cost recovery, it is important that: Services are provide through a system which is safety-focussed (e.g., NZ CAR Part 174) Services are also focussed on and sensitive to customer needs Customers are fully consulted and involved on means of cost recovery Ultimate consultation is negotiated commercial contracts! Common Principles

  23. Summary - Four Main Points • The world of aviation meteorology services and cost recovery is becoming more complex • Cost recovery is appropriate and recognised under ICAO guidelines and supported by WMO • Cost recovery has benefits for aviation, particularly in terms of accountability, transparency and more certain and customer-specified service delivery • A cost recovery framework must beimplemented and maintained infull and ongoing consultationwith all stakeholders in theaviation industry. • Thank you.

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