Air Traffic Infrastructure Global Markets 2012 World Forecasts 2012 - 2021 Markets • Policies • Infrastructure Finance

NEXA ADVISORS Air Traffic Infrastructure Global Markets 2012 World Forecasts 2012 - 2021 Markets • Policies • infrastructure finance

FEATURING S the inflection Point facing World ati Markets S the new economics of ati, including infrastructure finance S Disruptive and rapidly emerging technologies challenging nextGen and sesar th 1250 24 Street NW, Suite 300 Washington, DC 20037 USA Tel: +1-202-558-7417 www.nexacapital.com

Summer 2012

Dear Subscriber:

The world’s air traffic infrastructure (ATI) and its complex modernization programs are at a technical, policy and financial crossroad. As air traffic volumes recover from the latest global recession, congestion and gridlock are again becoming visible. But aviation infrastructure continues to erode. Governments are broke and must turn to new fees, taxes, and private sources of funding for infrastructure renewal. Disruptive new technologies and regional differences in the vision of future ATI architectures will challenge the Next Generation Air Transportation System (NextGen) and Single European Sky ATM Research (SESAR) programs. Airlines, coming out of a difficult decade of losses, find that they may foot most of the bill for ATI modernization, whether through investment in avionics or through increased user fees to pay for new ground infrastructure. Airlines are quickly realizing that they are and should be the new gate keepers for ATI modernization. All the while, aerospace companies are trying to understand the new ATI market dynamics, as corporate acquisitions work their way back into merger and acquisition agendas for 2013.

The genesis of ATI Global Markets 2012 is what we perceive as a need on the part of our aerospace clients active in the global air traffic management marketplace, for an integrated, comprehensive view of changing system policies, technologies, finances and market potential. Air Traffic Infra- structure Global Markets 2012 will be an essential tool for business strategists and top executives alike, providing facts and insights to support business planning and investment decision-making. Packed with information on air traffic infrastructure opportunities, communications, navigation, surveillance/air traffic management, NextGen, SESAR, and their rapidly evolving successor systems, aircraft avionics, and space systems, ATI Global Markets 2012 does the heavy lifting. It provides comprehensive opportunity assessments of ATI markets in 60 countries selected from all ICAO regions. Of tremendous value, ATI Global Markets 2012 lays out the new economics of ATI finance. This study is a must-have for top executives, providing the factual foundation for answer- ing key questions to support strategic decision-making.

We expect and welcome feedback from our subscribers as to ways in which the document can be modified or enhanced to provide ever greater value.

Sincerely,

Michael J. Dyment, Managing Editor Russell G. Chew, Editorial Advisor

i • NEXA • ATI Global Markets Acknowledgments

Much of the research information contained herein came from sources we wish to acknowledge gratefully, including ICAO (Montreal, QC), the FAA (Washington, DC), the Library of Congress (Washington, DC), and the libraries of the Massachusetts Institute of Technology (Cambridge, MA), Transport Canada (Ottawa, ON) and the World Bank (Washington, DC). As the CNS/ATM plans of over 60 countries were considered, we thank those within CANSO, and the many, many ANSPs and embassies who provided us with information regarding all facets of their countries’ air traffic modernization programs and needs.

We wish to give our enthusiastic thanks to the conscientious researchers and analysts who contributed extensively to the contents of this study, Marquitta Winston, Christina Nutting and Sha- ron Mall. Proofing assistance and a sharp pen came from several permanent and consulting members of the NEXA Advisors team, and we single out for special thanks Eleanor Herman Dyment, our resident New York Times bestselling author, for her meticulous attention to both fact and publishing detail.

This project consumed more time than we had initially anticipated, and we therefore want to thank our Charter Subscribers for their patience and endurance, without which this report would not have been possible.

MJD

ii • NEXA • ATI Global Markets Editorial Board

The authors and contributing editors of the 2012 edition of Air Traffic Infrastructure Global Mar- kets 2012 are introduced, with a brief biography, below.

Michael J. Dyment, Managing Editor

Mr. Dyment is the founder and managing partner of NEXA Capital Partners and NEXA Advisors. He is also a founder and general partner of The NextGen Equipage Fund.

Prior to NEXA, Mr. Dyment was a partner, senior managing director or principal with the aerospace practices of PricewaterhouseCoopers LLP, Arthur Andersen LLP, and Booz Allen & Hamilton Inc. He was also an officer and vice president of the Transportation Practice of A.T. Kearney, Inc. When at PwC, he was principal advisor to ITT on its 2007 $1.85 billion ADS-B award from the US FAA. Mr. Dyment’s past clients include the world's leading aerospace companies, such as the Boeing Com- pany, Embraer Empresa Brasileira de Aeronáutica S.A., Lockheed Martin Corporation, Inmarsat, and Rolls-Royce, to name a few. Airline and aviation industry clients include brand names such as Delta Airlines, Lufthansa, Swiss, EasyJet, Grupo TACA, and Orbitz. He has been an advisor to top policy makers and agencies such as the FAA, the US Transportation Security Administration, and the National Academy of Sciences. At A.T. Kearney, he led the acquisition and financial advisory team that ultimately secured the $1 billion purchase of Jet Aviation for Permira Beteiligungsbera- tung GmbH. His career in aerospace began in the supply chain, where in the early 1980s he was an engineer and product manager for GPS avionics and geodetic programs at Canadian Marconi Company in Montreal. While at Booz Allen, Mr. Dyment was author of the ground-breaking 1996 multi-client study, Air Traffic Control and Air Traffic Management Systems: An Analysis of Policies, Technologies, and Global Markets. This study established a global industry understanding of CNS/ ATM for the 21st century for many companies. Upon completion of the study, he advised many aerospace companies on CNS/ATM strategy and authored numerous articles relating to air traffic management, with a keen focus on both technology and market issues.

A popular and respected speaker on aerospace matters, his opinion is regularly sought by the media. He has been quoted in The Wall Street Journal, The International Herald Tribune, The Finan- cial Times and The Los Angeles Times. He has contributed to stories in Forbes Magazine, Wired Magazine, and Business Week and has been a guest on CNN, MSNBC, CBS, and ABC, offering insights on aerospace industry matters. Currently, he is a member of theAviation Week Magazine Board of Advisors on Top Performing Aerospace Companies and Top Performing Airlines.

Mr. Dyment holds a Master of Science in Aeronautics and Astronautics from the Massachusetts Institute of Technology, and a B.Sc.E. in Geodesy and Geomatics from the University of New Bruns- wick.

iii • NEXA • ATI Global Markets Russell G. Chew, Editorial Advisor

Mr. Chew is a managing partner of NEXA Capital Partners and NEXA Advisors. He is a general partner of The NextGen Equipage Fund. Some call Mr. Chew the “Father of NextGen.” While serving as chief operating officer of the Air Traffic Organization of the FAA, he set the groundwork for the current program architecture and structures. As COO, Mr. Chew was responsible for the operational and financial performance of the US air traffic control system and research and acquisition programs from 2003 to 2007.

After his years at the FAA, Mr. Chew served as president and COO of JetBlue Airways during the successful turnaround in its business model, sustained profitability, and operational integrity following its highly publicized operating debacle in the February 2007 snowstorm.

Prior to joining the FAA, Mr. Chew spent 18 years with American Airlines, Inc. where he headed System Operations Control and was responsible for performance of the airline’s operation of 2,300 flights daily to more than 220 cities in the US, Europe, Latin America, and Asia. He was responsible for the airline’s evaluation, acquisition, and implementation of new aircraft and ground technologies for airline fleet and operations planning. He performed technical and regulatory management in flight operations, systems development, and engineering and maintained line qualification as captain at American Airlines in B767, B757, and MD80 air-craft.

He has served on corporate executive boards and activities focused on airline operations, new technologies/air traffic control system requirements, and global air traffic control modernization programs. Mr. Chew attended Stanford University for his undergraduate studies and earned his doctoral degree at the University of Southern California.

James P. Hughey, Contributing Editor

Mr. Hughey is Senior Vice President at NEXA Capital Partners and an experienced financial professional with operational and strategic expertise in the logistics, transportation, and technology sectors where his roles have ranged from operations management to consulting and private equity/ venture capital. He supports both NEXA and its clients in shaping business strategy and growing enterprise value through corporate finance advisory and structured investment transactions.

In a management consulting role with Accenture, he advised several government agencies as well as private clients on logistics and technology issues ranging from strategic resource allocation to asset management and workforce efficiency. As an industrial engineer with UPS, he managed package operations planning and supervised the technical implementation of industry-leading programs within the sorting and delivery functions.

Mr. Hughey earned his MBA from The Darden School of Business and dual Bachelor of Science degrees in Industrial Engineering and Manufacturing Engineering from Northwestern University.

iv • NEXA • ATI Global Markets Carter Brockman, Contributing Editor

Mr. Brockman is a senior analyst with NEXA Advisors. He assists NEXA and its clients with key investment analysis and due diligence efforts throughout the financing lifecycle. He is a key contributor on global aviation and air traffic infrastructure projects, including modernization programs and next generation technologies.

Mr. Brockman holds a Master of Business Administration and a Bachelor of Science in Aerospace Engineering with a specialization in propulsion from Embry-Riddle Aeronautical University in Day- tona Beach, FL. Mr. Brockman also holds a private pilot certificate.

Tulinda Larsen, Market Analyst

Tulinda Larsen contributed to NEXA’s econometric forecast models of ATI industry and market demand. She brings more than 30 years of transportation industry expertise to develop strategic and technical solutions for clients. Prior to joining NEXA, Ms. Larsen directed analytical, consulting, and research services for several transportation companies, including SH&E and OAG. She provided extensive market research and forecasting services to aircraft engine and aircraft manufacturers including G.E., Pratt & Whitney, Japanese Aero Engines Corporation, Bombardier Region- al Aircraft Division, Saab Aircraft, Embraer, Fairchild Dornier/AvCraft, Raytheon (Beech Aircraft), China’s AVIC, and the new turboprop freighter, Skylander. She has advised regional aircraft financial companies, including IHI, Export Development Bank of Canada, AeroCentury Aircraft Leasing, and G.E. Commercial Aviation Services.

She is a private pilot, past-president (2001) of the Aero Club of Washington DC, member of the board of directors (2005-2006) of International Trade Data Users, member of the board of directors of the International Aviation Club, member of the International Aviation Woman’s Associa- tion, the Royal Aeronautics Society, and various committees of the Transportation Research Board, National Academies.

Ms. Larsen holds a Master’s degree in Economics and a Bachelor’s in Political Science from The George Washington University. She is candidate for a doctorate in management (2013).

NEXA Project Team

A dedicated, cross-functional team of NEXA professionals was assembled for this project. Each team member has a unique understanding and discipline to apply, including research, policy expertise, CNS/ATM technology understanding, market forecasting, financial and cost benefit modeling, investment banking, and infrastructure finance.

v • NEXA • ATI Global Markets NEXA Advisors Overview

ATI Global Markets 2012 is a NEXA Advisors project. NEXA Advisors provides strategic advisory services to the aerospace industry. Clients seek out NEXA Advisors to help develop transforma- tional business models in the aerospace supply chain, business aviation, air traffic management, homeland security, energy, and clean technologies and geomatics.

NEXA Advisors is a member of NEXA Capital Partners, an investment banking firm helping clients develop and implement effective corporate finance, capital investment, and M&A strategies leading to higher growth in enterprise value. NEXA has served small, mid-market, and large aerospace companies since 2007. In 2010, NEXA Capital Partners founded The NextGen Equipage Fund, LLC, a new investment fund created to accelerate equipage of US registered aircraft with NextGen avionics. The NextGen Fund is an innovative $1.5 billion infrastructure fund, whose investors include some of the largest aerospace companies in the world.

vi • NEXA • ATI Global Markets Table of Contents

Acknowledgments ii

Editorial Board iii

NEXA Project Team v

NEXA Advisors Overview vi

Acronyms xv

Introduction xix

1.0 Executive Summary 1

1.1 Key Findings 1

1.2 ATI Economics and Policies 2

1.3 ATI Investment and Financing 2

1.4 ATI Technologies and Applications 3

1.5 ATI Supply Chain 4

1.6 ATI Global Forecasts 4

1.7 ATI Airline Business Case 6

2.0 ATI - A Global Economic and Policy Perspective 9

2.1 The Economics of ATI 9

2.1.1 Airport Infrastructure 12

2.1.2 ANSPs and Finances 16

2.1.3 ATI Economic Drivers 20

2.2 Institutional Drivers and Benefits of Emerging CNS/ATM Systems 30

2.2.1 Limitations of Present Communications, Navigation, and Surveillance, and New Concepts 31

2.2.2 Limitations of Existing Air Traffic Management, and New Concepts 31

2.2.3 Benefits of ATI Modernization to Stakeholders 42

2.3 Policy Trends in Global and Regional CNS/ATM Programs 49

2.3.1 Existing CNS/ATM Infrastructure 49

2.3.2 CNS/ATM Modernization Programs and Policy Implications by Concept 53

2.4 Other International, Regional, and National Policies and Air Law Instruments 66

2.4.1 National Security, Regional Security, and CNS/ATM 66

2.4.2 Interoperability Factors: Standards, Procedures, and Certification 68

vii • NEXA • ATI Global Markets 3.0 ATI Investment and Financing 73

3.1 Background 73

3.2 Overview of Historical ATI Capital Financing by Government 75

3.2.1 Government Fiscal Landscape: 2012 through 2021 77

3.2.2 ANSP Funding 80

3.2.3 Restructuring of ANSP Charging Systems 86

3.3 Capital and Investment Programs 88

3.3.1 Credit and ANSPs 89

3.3.2 Current Momentum with Private-Sector Participation 90

3.3.3 Emerging Commercial Build-Operate Models 92

3.4 Characteristics of Private Sector ATI Financing 93

3.4.1 Policy and Regulatory Needs 94

3.4.2 Securitization of Revenues, Project Finance, and Risk 95

3.5 Identification of Future Funding Options for ATI 96

3.6 Active Sources for ATI Capital Investment 97

3.6.1 Government Agency Support and Sovereign Wealth Funds 97

3.6.2 Pension Funds and Endowments 103

3.6.3 Private Equity and Debt Capital 103

3.7 Top 100 ATI Projects 110

4.0 CNS/ATM Technologies & Applications 137

4.1 Introduction and General Overview 137

4.1.1 Background 137

4.1.2 Chapter Overview 140

4.2 Global CNS/ATM and Automation Applications 141

4.2.1 ATM Operational Concept Components 141

4.2.2 ATM Automation Applications 144

4.2.3 Technical Issues 147

4.2.4 Operational Issues 148

4.2.5 Institutional Issues 148

4.2.6 Future Trends 148

4.3 Communications 149 viii • NEXA • ATI Global Markets 4.3.1 Radio Frequency Spectrum 149

4.3.2 High Frequency (HF) 150

4.3.3 Very High Frequency (VHF) 151

4.3.4 Future Air-to-Ground Communications 152

4.3.5 Communications Systems Integration 155

4.3.6 Ground-to-Ground Communications 158

4.3.7 Satellite Communications 160

4.3.8 Network Switching Equipment 164

4.4 Navigation, Approach and Landing Systems 168

4.4.1 Performance Based Navigation (PBN) 169

4.4.2 Current and Developing Global Navigation Satellite Systems 174

4.4.3 Current Regional Satellite Navigation Systems 191

4.4.4 Current and Developing Augmentation Systems 193

4.4.5 Terrestrial-Based Precision Navigation, Approach, and Landing Systems 203

4.4.6 Terrestrial-Based Non-Precision Navigation, Approach, and Landing Systems 208

4.4.7 Airfield Lighting 213

4.5 Surveillance Systems 218

4.5.1 Primary Radar 218

4.5.2 Secondary Surveillance Radar 221

4.5.3 Automatic Dependent Surveillance (ADS) 224

4.5.4 Multilateration 228

4.5.5 Surface Surveillance 230

4.5.6 Airborne Collision Avoidance 232

4.6 Weather Systems 235

4.6.1 Automated Weather Stations 235

4.6.2 Wind Shear and Air Turbulence Detection Systems 238

4.6.3 Weather Dissemination and Display Technology 240

5.0 The ATI Supply Chain 245

5.1 General Aerospace and Defense (A&D) Industry Sector Considerations 245

5.1.1 Economic and Political Factors 245

5.1.2 Market Factors 246

ix • NEXA • ATI Global Markets 5.1.3 Industry Sector Factors 253

5.1.4 ATI Companies and Principal Products, Systems, and Services 253

5.2 Supply Chain Model 254

5.2.1 Mapping 254

5.3 CNS/ATM Ground and Space Systems Supply Chain 256

5.3.1 Supplier Tiers 257

5.3.2 Key Developments and Challenges Affecting CNS/ATM Ground and Space Systems Supply Chain 259

5.4 CNS/ATM Avionics Supply Chain 261

5.4.1 Supplier Tiers 261

5.4.2 Key Developments and Challenges Affecting the CNS/ATM Avionics Supply Chain 264

6.0 ATI Industry & Market Forecast 267

6.1 ATI Forecast Model - Methodology and Assumptions 270

6.1.1 Econometric Model Overview 271

6.1.2 ANSP and Commercial Aircraft ATI Industry and Market Forecast 273

6.2 ANSP ATI Investment - Unconstrained 279

6.2.1 ANSP ATI Investment Overview 280

6.2.2 Forecast Methodology 281

6.2.3 ANSP ATI Forecast by Program 284

6.2.4 ANSP ATI Forecast by Function 293

6.3 Commercial Aircraft Equipage Investment — Unconstrained 296

6.3.1 Forecast Methodology 297

6.3.2 Global Fleet Forecast (2012-2021) 297

6.3.3 Equipage Classes 298

6.4 Incorporating Investment Constraints 302

6.4.1 ANSP ATI Investment — Constrained 302

6.4.2 Aircraft Equipage Investment – Constrained 305

6.5 ATI Funding Gap 306

6.5.1 Customer/User Pays Concepts 306

6.5.2 Private Sector Financing 307

7.0 The Airline Business Case 309

7.1 Cost of Capital and Hurdle Rates 309 x • NEXA • ATI Global Markets 7.2 “Cash is King” – Return of Invested Principal 309

7.3 CNS/ATM Implementation Delays 310

7.4 Predominant Equipage 311

7.5 Technical Refresh 311

7.6 Role of Government 311

7.7 Summary 311

7.8 Airline Cost of Capital for Discretionary Investments 311

Appendix of Selected Air Navigation Service Providers 317

Islamic Republic of Afghanistan 320 Argentina 322 Australia 324 Bahrain 326 Bangladesh 328 Bolivia 330 Brazil 332 Bulgaria 334 Canada 336 Chile 338 China 340 Colombia 342 Egypt 344 Ethiopia 346 France 348 Federal Republic of Germany 350 Ghana 352 India 354 Indonesia 356 Ireland 358 Italy 360 Jamaica 362 Japan 364 Jordan 366 Kazakhstan 368 Kenya 370 Republic of Korea 372 Lebanon 374 Libya 376 Malaysia 378 Mexico 380

xi • NEXA • ATI Global Markets Myanmar 382 Netherlands 384 New Zealand 386 Federal Republic of Nigeria 388 Norway 390 Oman 392 Pakistan 394 Panama 396 Peru 398 Philippines 400 Romania 402 Russia 404 Saudi Arabia 406 Republic of Senegal 408 Singapore 410 South Africa 412 Spain and the Canary Islands 414 Switzerland 416 Tanzania 418 Thailand 420 Trinidad and Tobago 422 Turkey 424 United Arab Emirates 426 Ukraine 428 United Kingdom 430 Uruguay 432 United States of America 434 Venezuela 438 Vietnam 440 Selected Bibliography 443

xii • NEXA • ATI Global Markets xiii • NEXA • ATI Global Markets xiv • NEXA • ATI Global Markets Acronyms

A Radio Altitude ATM Air Traffic Management AC, A/C or ACFT Aircraft ATN Aeronautical Telecommunication ACC Area Control Center Network ACARS Aircraft Communication and ATS Air Traffic Services Addressing Reporting System CAA Civil Aviation Authority ACAS Airborne Collision Avoidance System CARATS Collaborative Actions for Reno- ACI Airports Council International vation of Air Traffic Systems (Japan) ACMS Aircraft Condition Monitoring CDM Collaborative Decision Making System CDU Control/Display Unit AD Airworthiness Directive CFIT Controlled Flight Into Terrain ADS Automatic Dependent Surveillance CNS Communications, Navigation, and ADS-B Automatic Dependent Surveil- Surveillance lance-Broadcast COMPASS Global Navigation Satellite ADS-C Automatic Dependent Surveil- System (China) lance-Contract ConOps Concept of Operations AEA Association of European Airlines COTS Commercial Off-The-Shelf AFS Aeronautical Fixed Service CPDLC Controller Pilot Data Link Communi- AFTN Aeronautical Fixed Telecommunica- cations tion Network CVR Cockpit Voice Recorder AIP Aeronautical Information Publica- DME Distance Measuring Equipment tion DoD Department of Defense ALS Approach Lighting System EAS Equivalent airspeed ANSP Air Navigation Service Provider EASA European Aviation Safety Agency AOA Angle of Attack EFIS Electronic Flight Instrument System AOC Air Operator’s Certificate EGNOS European Geostationary Navigation AOC Airline Operations Center Overlay Service AOM Airport/Aerodrome Operating EGPWS Enhanced Ground Proximity Warn- Minima ing System APU Auxiliary Power Unit EIB European Investment Bank ARPT Airport EICAS Engine Indicator and Crew Alert ARSR Air Route Surveillance Radar System ARTCC Air Route Traffic Control Centers E-LSA Experimental light-sport aircraft ASAS Airborne Separation Assurance EUROCAE European Organisation for System Civil Aviation Equipment ASM Airspace management FAA Federal Aviation Administration ASPIRE Asia and South Pacific Initiative to FANS Future Air Navigation System Reduce Emissions FBO Fixed Base Operator ASR Airport Surveillance Radar FDR Flight Data Recorder (also known A4A Airlines for America as black box) ATC Air Traffic Control FIC Flight Information Region ATCO Air Traffic Controller FIR Flight Information Region ATCSCC Air Traffic Control System Command FL Flight Level Center FMC Flight Management Computer ATCT Airport Traffic Control Tower (same as FMS) ATFM Air Traffic Flow Management FMS Flight Management System ATIS Automatic Terminal Information FPL Filed Flight Plan Service FSS Flight Service Station

xv • NEXA • ATI Global Markets GA General Aviation mately 1.55Ghz GALILEO Global Navigation Satellite System LCC Low Cost Carrier (Europe) LEO Low Earth Orbiting GBAS Ground Based Augmentation System LLWAS Low-Level Wind shear Alert System GCA Ground-controlled approach LNAV Lateral Navigation GEO Geostationary Earth Orbit LORAN Long Range Navigation System GLONASS Global Navigation Satellite LRU Line-replaceable unit System (Russia) MATS Manual of Air Traffic Services GLS GNSS Landing System MDA/H Minimum Descent Altitude/Height GND Ground MEO Medium Earth Orbit GNSS Global Navigation Satellite Systems METAR Meteorological Aerodrome Report GP Glide Path MLAT Multilateration GPS Global Positioning System MLS Microwave Landing System GPWS Ground Proximity Warning System MODE S Mode Select GSE Ground Support Equipment MRO Maintenance Repair Overhaul HF High Frequency MSA Minimum Safe Altitude / Minimum HUD Head-up display Sector Altitude Hz Hertz MSL Mean Sea Level IAP Instrument approach procedure MSSR Monopulse Secondary Surveillance IAS Indicated airspeed Radar IATA International Air Transport Associa- MTOW Maximum Take-Off Weight tion MZFW Maximum Zero-Fuel Weight ICAO International Civil Aviation Organiza NAS National Airspace System tion NASA National Aeronautics and Space Ad- IFR Instrument Flight Rules ministration ILS Instrument Landing System NAVAID Navigational Aid IMC Instrument Meteorological Condi- NDB Non-Directional Beacon tions NextGen Next Generation Air Transporta- INS Inertial Navigation System tion System IRS Inertial Reference System NM Nautical Mile ISA International Standard Atmosphere OBS Omni-Bearing Selector ISFD Integrated Standby Flight Display OEM Original Equipment Manufacturer ISIS Integrated Standby Instrument OTS Out of service System PAR Precision Approach Radar KA Radio Frequency Ka PBD Place Bearing Distance (RNAV kHz Kilohertz waypoint) Kts Knots PENS Pan-European Network Service Ku Radio Frequency Ku PFD Primary Flight Display L1 GPS Standard Positioning Service PPP Public-Private Partnership L-band ranging signal RNAV Area navigation L1 Carrier “Link” Frequency RNP Required Navigation Performance 1575.42Mhz RRTES Reroutes L2 GPS Precision Positioning Service RSLS Runway Status Light System L-band ranging signal RSR En-route Surveillance Radar L2 Carrier “Link” Frequency 1227.6 RTCA Radio Technical Commission for Mhz Aeronautics L3 Carrier “Link” Frequency 1385.05 RVSM Reduced Vertical Separation Mhz Minimum LAADR Low Altitude Arrival/Departure S/W Microwave Frequency between 2 Routing and 4 Ghz L-BAND Frequency from 390Mhz to approxi- SATCOM Satellite Communications xvi • NEXA • ATI Global Markets SATNAV Satellite Navigation SBAS Satellite-Based Augmentation System (SBAS) SES Single European Sky SESAR Single European Sky ATM Research SID Standard Instrument Departure SOC Start of Climb at Missed Approach SOE State-Owned Enterprise SSR Secondary Surveillance Radar STC Supplemental Type Certificate SV Space Vehicle SWIM System Wide Information Manage- ment TAA Terminal Arrival Area TACAN Tactical Air Navigation TAM Total Airport Management TAR Terminal Approach Radar TAS True airspeed TCA Terminal control area TCAS Traffic Collision Avoidance System TDLS Tower Data-Link Service TDM Time Division Multiplex TDMA Time Division Multiple Access TO/GA Take-off/go around TOD Top of Descent TOW Take-off weight TOWS Take-off warning system TRACON Terminal Radar Approach Control UAC Upper Area Control UAV Unmanned Air Vehicle UHF Ultra High Frequency UTC Universal Coordinated Time VDL VHF Datalink VFR Visual flight rules VHF Very High Frequency VMC Visual meteorological conditions VNAV Vertical Navigation VOR VHF omnidirectional range WAAS Wide Area Augmentation System WTO World Trade Organization XPDR / XPNDR Transponder Z Zulu Time (UTC)

xvii • NEXA • ATI Global Markets xviii • NEXA • ATI Global Markets Introduction

This study takes a unique approach to ana- ATI modernization at and above the nation- lyzing the global ATI market. Most analyses al level. The ability of today’s fragmented air have focused on the air traffic that departs navigation systems to avert or mitigate such from or arrives in a country or its airports. disruptions (and their resultant economic That data tells only part of the story. ATI harm) with ad hoc solutions is nearly- ex also serves aircraft that transit a nation’s hausted. airspace without departing from or landing Systematic, long-term solutions are at hand, there. This overflight traffic can be signif- forged through aviation’s relentless and icant for air navigation service providers continuing technological advance. As traffic (ANSPs) that lie along major international growth increases the need for their prompt air routes, accounting in some cases for 60 implementation, however, ATI financing is percent or more of annual revenues. Traffic a substantial roadblock and must be trans- on long-range airline flights traditionally has formed. grown faster than shorter-range segments and is expected to continue outpacing those National governments in the past paid for segments’ growth. much of the development, implementation, and sustainment costs of today’s ground- As the communications, navigation, and sur- based ATI. Political pressures to constrain veillance (CNS) and air traffic management budgets and reduce deficit spending and re- (ATM) systems and capabilities that make lated concerns about the creditworthiness up ATI erode, air transportation is growing of government debt threaten to deprive in both numbers and complexity. Forecasters nations of the ability to pay such costs for see air traffic resuming its traditional glob- future systems. The burden of those costs is al growth rate through 2021, with much of shifting to industry. the projected growth coming outside the big markets of North America and Europe. Traf- Aircraft operators will bear more of that bur- fic is shifting south and east into Asia, the den as a result of technological advances Middle East, Latin America, and Africa. This that move the nexus of state-of-the-art CNS/ reflects ongoing globalization of trade that is ATM capabilities from ground-based systems increasing business activity in those regions. owned by governments to airborne systems Throughout the world, greater portions of on operators’ fleets. The largest group of op- populations are being drawn to urban areas. erators consists of the world’s airlines. They The number of cities with at least five million are compelled by operating costs, general residents will swell throughout our forecast economic conditions, and shareholders to period. Many of those residents will realize judge severely all equipment upgrade pro- greater income, increasing their propensity posals. Those that promise swift, significant to travel. New routes and destinations and returns will merit the investment of airlines’ growth for established ones will dictate more limited pools of discretionary funds. Against efficient designs of airspace and air traffic those criteria, airlines rate many ATI-related procedures, as well as predictive and flexible investments poorly. The case for such invest- systems to implement those changes. ments is weakened further by the underuti- lization in today’s air traffic control systems Today’s ATI is not scalable to handle such of modern airliners’ advanced navigation ca- growing activity and complexity. This has pabilities, which makes those aircraft pricey been demonstrated by recent instances of underperforming assets on an airline’s bal- gridlock that had global impact, as well as ance sheet. by longstanding warnings that problems will worsen without widespread, coordinated These financial considerations are critical. In the past, air navigation service providers

xix • NEXA • ATI Global Markets owned and run by governments dictated and support would produce a list of the usual CNS/ATM technical requirements aimed at suspects among the world’s largest air mar- meeting international standards (or adopted kets: the US, China, the UK, Germany, Cana- those set by the world’s largest ANSPs); air- da, Spain, and so on. Vietnam would not be craft operators essentially were compelled high on the list. Bolivia would barely make to comply and incur related equipment costs the cut, and Afghanistan, Jamaica and Tanza- to gain access to the skies. Given their new nia would miss it. But consider their positions funding role, operators will demand a sig- under major international routes – between nificant voice in the definition, operation, Europe and Asia, South America’s Southern performance, benefits, and cost of CNS/ATM Cone and North America, Europe and India, capabilities. They have clamored for such in- and between Central and South America and put in the past, but now they – particularly much of the world. Combine that with their airlines – hold many of the purse strings. This existing ATI needs and projected growth and means airlines control the future ATI invest- you see the significance of such ANSPs come ments. into focus.

The private sector can close the gaps be- We have combined such route analysis with tween funding required to match ATI capa- O&D market size, past traffic, and projected bilities with demands of air traffic growth growth to compile that list of 60 countries. and the inability or unwillingness of govern- Air Traffic Infrastructure Global Markets ments and operators to provide that funding. 2012 assesses the equipment, systems, and Private-sector participation (PSP) in financ- services they will require and also identifies ing infrastructure improvements in roads, the top 50 air traffic infrastructure projects rail, ports, prisons, hospitals, and housing around the world. is common. It has been widely employed in upgrading airport facilities and operations. Any global study like this must address how Notable successes with ANSPs (both privat- to divide the world for analysis and fore- ized/corporatized and government-owned) casting. For aviation, there is no standard have demonstrated PSP’s potential for re- regional division of the world. Industry fore- ducing costs to governments, containing casters, such as those at the major aircraft costs for operators and making ANSPs more manufacturers, use divisions that best suit accountable for their performance and ef- their unique business needs; this presents ficiency. PSP can help build business cases challenges for firms like NEXA seeking to for ATI investments that align benefits with align different manufacturers’ forecasts for costs for the gate keeper airlines. The recent analysis. global financial environment has left large amounts of cash available for investment While the International Civil Aviation Orga- in attractively structured deals, and the pri- nization (ICAO) sets standards for aviation in vate-sector firm experienced in aviation and many respects, it does not do so for world re- in infrastructure financing can create struc- gions. That agency has consolidated regions tures that meet those requirements. in recent years from nine to seven. Their boundaries today reflect ICAO’s administra- Air Traffic Infrastructure Global Markets tive needs more than geographic groupings. 2012 examines these and other market forc- The Caribbean and Central America have es that will shape the provision, use, and fi- been combined with North America into one nancing of air navigation services and their region, for instance. Africa is split among infrastructure around the world in the com- three, with Algeria, Morocco and Tunisia (as ing decade. The executive summary below well as the disputed Western Sahara region) reviews those factors and NEXA Advisors’ assigned to the one that now combines the forecasts for the market through 2021. European and North Atlantic regions. Analysis of origin-and-destination (O&D) Unfortunately, ICAO reports and forecasts traffic aimed at identifying the 60 countries have not yet been realigned with the new that present the best prospects for ATI sales xx • NEXA • ATI Global Markets structure, and agency documents often refer to the former nine regions. An additional complication is that ICAO is a United Nations agency and also uses the former’s division of six regions for statistical analysis. For this study, we use six regions, which are named and delineated by boundary and composi- tion in Section 6.

xxi • NEXA • ATI Global Markets xxii • NEXA • ATI Global Markets 1.0 Executive Summary

Increasing air traffic congestion is crowding delayed upgrades — and resulting erosion — the world’s airspace, resulting in passenger of the infrastructure, turmoil in global econ- frustration and adverse effects on tourism, omies and political systems, the growing business, trade, and the global economy. level and complexity of air traffic, intensify- Despite lingering economic malaise from the ing environmental concerns, the absence of 2007 - 2009 recession, and economic and harmonized visions of the future, lagging ap- fiscal turmoil in Europe, the International plication of technological advances, changes Air Traffic Association (IATA) reports that the to the airline business model, and lackluster first quarter of 2012 saw an 8.1 percent in- airline commitment to CNS/ATM aircraft increase in international passenger traffic and vestment, and more stringent enforcement a 5.5 percent increase in US traffic. In 2010, of international safety standards. Finally, there were some 940 million internation- the cost of ATI modernization has gone up, al tourist arrivals worldwide, a 6.6 percent and who will pay for it will define the pace growth over the prior year. ICAO predicts of change. Nothing is what it seems, so over that by 2021 global international air passen- the next 10 years, today’s inflection point gers will reach 1.6 billion, and US domestic will take the ATI industry into a new and, we passengers will number 2.4 billion. To ser- think, highly positive, direction. vice the growth in passenger traffic as well as increased air cargo, the global commercial aircraft fleet for both passenger aircraft and freighters is projected to grow from 27,000 1.1 Key Findings aircraft in 2011 to 38,000 in 2021. Current ATI modernization initiatives are based on making fuller use of CNS/ATM capa- The first decade of this century was a water- bilities on airborne aircraft, such as area nav- shed for ATI throughout the world. Passen- igation (RNAV) and required navigation per- ger growth and airline movements fluctu- formance (RNP) approaches, and developing ated according to regional as well as global new capabilities like automatic dependent political and economic events. As air traffic surveillance-broadcast (ADS-B) and digital volumes recover from the latest global re- data-based communications. This is a change cession, congestion and gridlock are again from past approaches, which relied largely becoming visible. on ground-based systems paid for, built, and But aviation infrastructure continues to maintained by government-owned/operated erode. Governments are broke and must ANSPs. That change comes at a time when turn to new fees and taxes, and private airlines, the largest and most influential op- sources of funding, for infrastructure renew- erator group, are increasingly cautious about al. Disruptive new technologies and region- making investments that provide adequate al differences in the vision of future ATI ar- and timely returns. As a result, airlines will chitectures will challenge the NextGen and demand a greater voice in the definition of SESAR programs. Airlines, coming out of a ATI upgrades, the benefits they are intend- difficult decade of losses, find that they may ed to provide, the timetable on which they foot most of the bill for ATI modernization, will be provided, and the actual provision of whether through investment in avionics or them. Skepticism about ATI-related invest- through increased user fees to pay for new ments is heightened by past airline invest- ground infrastructure. Airlines are quickly ments in ANSP initiatives never brought to realizing that they are and should be the new fruition and doubts that ANSPs understand gate keepers for ATI modernization. the operational constraints of equipping an airline fleet for new capabilities. Airlines will The ATI market has now reached a strategic become the gate keepers of ATI moderniza- crossroad. Several factors have led us here: tion initiatives.

1 • 1 • NEXA • ATI Global Markets from unfavorable clearances, unpredictable 1.2 ATI Economics and Policies weather, or terminal area delays. This, in turn, creates significant costs for the airlines, The air transport infrastructure sector exhib- which lose millions of tons of fuel, and frus- its all of the characteristics of global integra- trates passengers who miss connections. tion. Airport and air traffic control systems provide components of the operational en- Obsolete air traffic control systems also re- vironment for the safe and efficient trans- sult in headline-making near miss aviation portation of passengers and goods through collisions, including one in January 2011 off the air among sovereign jurisdictions. In and the coast of New York City in which a military between countries, air transport is an indus- cargo plane almost hit a Boeing 777 with 250 try driven primarily by domestic and interna- passengers aboard, and another in April of tional trade. Thus, the health and efficiency that year that threatened the First Lady, Mi- of a nation’s air transport sector is often a chelle Obama, when her jet nearly collided barometer of that nation’s competitiveness. with a cargo plane while landing at a US air force base. According to a Washington Post In addition to generating economic activity report, some 1,900 ATC slip-ups occur in US with aircraft production, airline operations, airspace annually. airport construction, and CNS/ATM equipment manufacturing, air transport is an in- Section 2 deals with environmental policy tegrative tool affecting much of the world’s and ATI. Aviation accounts for only three business, as well as a foundation for the percent of carbon emissions from the glob- tourism industry and a cost-effective means al transport sector, though aviation-related of distributing goods and services. Particular carbon emissions often have a higher warm- benefits are obtained from a sustained in- ing potential than ones emitted elsewhere. vestment in air transport infrastructure be- Due to increased fuel savings and lower flight cause of the impact of this industry on other times, modern ATI capable of performing to sectors of the economy, and on the world full potential has the capacity to reduce the economy as a whole. carbon footprint of airlines by as much as 15 percent. The relationship between efficient air transportation and modern airspace management Section 2 also examines the global, national, is well established in developed countries, and regional imperatives of the air transport and is a necessary linkage when considering sector and its CNS/ATM infrastructure, with infrastructure investment in a nation’s civil these issues as a backdrop. aviation system. Current air traffic infrastructure and air traffic control practices, most of which were developed and implemented 1.3 ATI Investment and Financing more than 60 years ago, are not capable of supporting increased demands for air - trav Conflicts between funding resources and el and, in fact, in many nations service is demand for improved, expanded, and more getting worse every year. According to the efficient ATI can be an impetus for change. Global Competitiveness Report of the World That was the case in the 1980s, when the UK Economic Forum, in 2008 the US ranked 12th faced a combination of economic, budgetary among 134 nations in the quality of ATI. In and ideological pressures that led to a cam- 2011, it dropped 19 positions, to 31st of 142 paign of privatizing government enterprises. nations. A related survey of business execu- Just a few examples include British Aero- tives in 2008 ranked US ATI 6.3 on a scale on space, British Shipbuilding, British Telecom, which seven represents the world standard. British Airways, and eventually National Air The ranking fell to 5.7 in 2011. Traffic Services.

Outdated technology requires large distanc- The resulting trend spread across a variety es between planes for safety and substantial of government activities in much of the fuel reserves for ATC contingencies that arise

1 • 2 • NEXA • ATI Global Markets world, including air navigation services, and rate fund created to finance a particular in- it continues today. frastructure project, or directly through an equity stake in the project. (Editor’s note: A chronology of 60 countries and their evolution toward more business- As an asset class, ATI projects have like models is found in the Appendix). attributes historically attractive to investors. These include the long duration of such Other nations have explored more options investments, revenue assurance, inherent for reducing the cost and increasing the protections against volatility and inflation, efficiency of their air navigation services, diversification by geography and business including reforms intended to allow their line, relative transparency, and predictability ANSPs to operate as a corporation or com- of returns on invested capital due to generally mercial entity. For example, privatization or stable cash flows. contractual commercialization of specific ATI functions can allow a country to reduce air In the US, given the huge NextGen price tag navigation-related costs while avoiding the and a political climate in which big ticket high hurdle of addressing national security items will be viewed with a jaundiced eye, a concerns that a wholesale ANSP privatiza- PPP is imperative for aviation modernization tion may provoke. Some nations have turned and its many tangible benefits for safety, the to the private sector to run all or parts of economy, and the environment. In 2010, their ANSP functions, including airspace de- ITT Exelis partnered with major aerospace sign, procedures design, training and certification of ATCOs, tower operations, etc., on a companies to create the NextGen Equipage contract basis. Fund to begin the equipage process more quickly. The Fund is managed by NEXA The clear solution to government budget Capital Partners, LLC of Washington, DC. constraints is the use of public-private part- The Fund is sizeable ($1.5 billion) and is nerships (PPPs), an arrangement whereby designed to retrofit up to 70 percent of the government and private investors share both US air transport fleet, quickly getting the the risk and profit of infrastructure devel- industry to predominant NextGen equipage opment. Optimally, investors benefit from levels. It offers low-interest rate financing steady revenue while the government bene- options that spread the cost of equipage fits by providing much needed infrastructure over long periods and defer payments for at a far lower cash outlay, freeing up funds to airlines to better align them with their use elsewhere. realization of benefits. The many equipage options are financed from the Fund’s equity, Private infrastructure funds pool capital from multiple investors, both foreign and supplemented by commercial debt backed domestic. Their investors include pension by federal loan guarantees. funds, sovereign wealth funds, endowments Section 3 explores the traditional sources and high-net-worth individuals. While fund of ATI funding initiatives and how increased governance mechanisms are rarely publicly demand and modernization, coupled with disclosed, they typically limit the role that dwindling government funding resources, a single investor can play to an advisory ca- is quickly leading to a critical gap in funding. pacity and minority status, with no rights for The analysis then turns to new sources of operational control of infrastructure assets. capital, such as private sector participation. What these funds have in common is that they allow quick and easy access to investments in the infrastructure marketplace. They are set up to investigate infrastructure 1.4 ATI Technologies and Applications opportunities quickly and efficiently and can commit large amounts of capital in a short The present air traffic management system timeframe. Investments in infrastructure can has been in use for over 60 years. It was con- be made either indirectly, through a sepa- ceived while radar was a nascent technology,

1 • 3 • NEXA • ATI Global Markets and the volume of air traffic was significantly less than today’s levels. Repeated attempts 1.5 ATI Supply Chain to increase capacity in order to meet rising demand in the absence of modern automa- Among the most significant aspects of the tion or new operational concepts proved to strategic inflection point reached by the be unsuccessful. Consequently, the flexibility global ATI market – the nexus of this report to operate efficiently in global airspace has – is the evolution of well-established and thus far been inadequately addressed. distinct industry supply chains, each having a critical role in ATI modernization. In the current air traffic control concept of operation, flight routes and altitude- infor The global aerospace sector has proven to mation are provided to airline operators via be a strong and resilient industry segment, filed flight plans and positive (radar) control, even with the shocks of the Great Recession which often results in significant operation- of 2007-2008. Currently the general health al and economic inefficiencies. Flight plans, of the global A&D sector is good. Since the when used in conjunction with surveillance mid-2000s, the sector has witnessed impres- radar, provide controllers with predictable sive growth, with the civil aviation segment flight path data for each aircraft in their sec- emerging as the major contributor to this ex- tor. With this knowledge, controllers are able pansion. The US and European countries are to manage traffic and resolve potential flight the dominant markets for aerospace prod- path conflicts. The problem with this concept ucts, systems, and services, and act as mar- is that it is highly inflexible and inefficient, ket catalysts supporting this overall growth. particularly as air traffic growth continues to increase. For the purposes of this report, the ATI supply chain refers to the two networks of busi- Trajectory-based operations (TBO) are those nesses involved in providing products, sys- airspace operations in which the future tra- tems, and services to customers (Figure 1-1). jectories of all aircraft, i.e., their four-dimen- Included in the section is a composite listing sional (4D) paths through space and time, of over 300 companies that contribute to the are the basis for separation and efficient flow air traffic industry supply chain and the role in the airspace. 4D trajectories are predict- played by each. ed and regularly updated by an automation system and used to solve traffic conflicts, -sat Figure 1-1 isfy metering constraints, avoid weather and restricted airspace, and find more efficient ATI Supply Chain Top Five Tier 0 flight paths, all in an integrated manner. Segment Customers CNS/ATM Ground and • ANSPs This shift from clearance-based to trajecto- Space Systems Supply • National govern- ry-based air traffic control will enable- air Chain ments craft to fly negotiated flight paths necessary • Airports for full performance-based navigation, tak- • Militaries • Aircraft OEMs ing both operator preferences and optimal airspace system performance into consider- CNS/ATM Avionics Sup- • Airlines ply Chain • Charter and business ation. aircraft operators • Aircraft OEMs Section 4 provides an overview and general • MRO providers discussion of various CNS/ATM technologies • Militaries and their applications that will be discussed in further detail. Where practical, those technical, operational, and institutional issues that have a direct bearing on the implemen- 1.6 ATI Global Forecasts tation of a specific technology are presented In this section, the report integrates the re- and discussed. Future trends information is search and analysis of the previous topics to also included. develop investment forecasts for infrastruc- 1 • 4 • NEXA • ATI Global Markets ture and aircraft equipage needed to imple- Figure 1-2 ment ATI for the ten-year forecast period Mature ANSP, Developing ANSP, and Aircraft (2012-2021). Investment

The forecasts project the investment require- Aircraft CNS ments for ANSPs to upgrade or implement 18% programs related to communication, navigation, surveillance (CNS), ATM, automation, weather, facilities, and mission support. Also included is a forecast for necessary CNS avi- Developing onics equipage investment across the global ANSP 19% fleet. These ATI market forecasts project estimates based on what world governments and commercial aircraft operators need to procure over the next decade to keep pace with emerging ATI modernization require- Source: NEXA Forecast ments. Figure 1-3 Transitioning air traffic control and manage- Annual ATI Investment ment to next-generation infrastructure and the supporting systems is very costly. There- fore, budgetary constraints restrict what and where a nation can afford to invest. The forecasts analyze the gap between requirements and constraints due to the shortage of capital. Therefore, we present the ATI forecasts via two perspectives:

• Unconstrained by availability of capital – assuming no project funding restrictions exist. Source: NEXA Forecast

• Constrained by availability of capital – applying funding constraints by country and region of the world. Taken together, the Study Team projects that The Study Team also segmented the uncon- over the next decade the six regions and strained global ANSP investment require- respective airlines of the world will face an ment into three functions: equipment, sys- unconstrained investment requirement of tems, and services. US$105 billion for ground and airborne systems to transition to a global satellite-based • Equipment upgrade and replacement is CNS/ATM infrastructure (Figure 1-2). projected to require $33 billion through 2021 (39 percent of the total ATI in- Communication, navigation, and surveil- vestment requirement). Infrastructure lance capabilities account for $39 billion (38 consists of basic hardware to support percent) of the anticipated ATI investment. ATI modernization and sustainment pro- The projected ANSP unconstrained invest- grams, including ADS-B ground stations, ment requirement for ATM/Automation over runway lighting, and equipment to sup- the next decade exceeds $37 billion, or 36 port GPS, WAAS, EGNOS, PBN, RNAV, percent of the required ATI investment. The and RNP procedures. other ATI investment requirement categories are weather systems, facilities, and mission • Systems that make the hardware func- support. Collectively, they will require $8 bil- tion are projected to require a $46 billion (Figure 1-3). lion (55 percent of total ATI) investment

1 • 5 • NEXA • ATI Global Markets by ANSPs over the next decade. These This gives rise to new opportunities for com- systems include trajectory-based oper- panies to structure financing when pursuing ations that allow for more direct flight these. paths, collaborative air traffic management and decision-making, and improved traffic flow management sys- 1.7 ATI Airline Business Case tems. Section 7 focuses on the unique business • Services are projected to require an case challenges faced by the airlines as they unconstrained investment by ANSPs of confront the prospect of investing in, and $5 billion (six percent of total ATI) over waiting for, the benefits promised by the the next decade; these include training, new globally-integrated air traffic manage- weather services, system engineering, ment system. research, and development. The mature ANSPs will invest heavily in systems engineering and R&D programs, while the developing ANSPs are more likely to purchase off-the-shelf solutions and focus on training support programs.

The aircraft equipage forecasts detail the investments required for airlines to take advantage of advanced CNS and ATM programs. The forecasts estimate commercial aircraft equipage investment by aircraft type (twin-aisle, single-aisle, regional jet, and turboprop), by program (communications, navigation, and surveillance), and by world region (North America, Europe, Asia Pacific, Middle East, Africa, and Latin America).

The ATI investment required of commercial airlines through 2021 will follow the ANSP investment profile. More than $19 billion, or 18 percent of the total unconstrained ATI investment forecast, will be required by airlines to install avionics such as ADS-B, satellite-based navigation, and digital communications.

According to an analysis of the financial health of both government and airlines, immediate and persistent investment constraints could produce a shortfall of $26 billion, representing approximately 25 percent of the investment requirement over the next decade. Unfortunately, much of the gap could go unfunded, leaving ATI programs be- hind demand for the services, and delayed and inadequately funded over the next decade. Therefore, closing this funding gap will require greater utilization of alternative funding sources, including the private sector.

1 • 6 • NEXA • ATI Global Markets 1 • 7 • NEXA • ATI Global Markets

2.0 ATI - A Global Economic and Policy Perspective The world’s economies are becoming in- Global tourism is also relevant to ATI and, in creasingly integrated and interdependent. some cases, vital for many countries. It brings Examination of the automotive, computer, in large amounts of income in payment for or chemical industries point to operations goods and services available, contributing that integrate factory processes and supply an estimated five percent to the worldwide chains that span six continents. One na- gross domestic product (GDP), and it creates tion’s trade, commerce, and environmen- opportunities for employment in the- ser tal programs in turn affect the entire world vice industries associated with tourism. In community. Industrialization, advanced 2010, the last full year for which numbers transportation, globalization, multinational are available, there were over 940 million corporations, and outsourcing are all having international tourist arrivals worldwide, rep- a major impact on the international trade resenting a growth of 6.6 percent compared system. Increasing international trade is to 2009. International tourism receipts grew crucial to the continuance of globalization. to $920 billion in 2010, an increase in real Without international trade, nations would terms of 4.7 percent. be limited to the goods and services produced within their own borders. The air transport industry exhibits all of the characteristics of global integration. Airport This section examines the global, national, and air traffic control systems provide com- and regional imperatives of the air transport ponents of the operational environment for sector and its CNS/ATM infrastructure. the safe and efficient transportation of passengers and goods through the air among Figure 2-1 sovereign jurisdictions. In and among coun- Volume of World Merchandise Exports tries, air transport is an industry driven primarily by domestic and international trade. Thus, the health and efficiency of a nation’s air transport sector is often a barometer of that nation’s competitiveness.

In addition to generating economic activity with aircraft production, airline operations, airport construction, and CNS/ATM equipment manufacturing, air transport is an in- tegrative tool affecting much of the world’s business, as well as a foundation for the tourism industry and a cost-effective means

Source: World Trade Organization of distributing goods and services. Particular benefits are obtained from a sustained investment in air transport infrastructure because of the impact of this industry on other 2.1 The Economics of ATI sectors of the economy, and on the world economy as a whole. Over $27 trillion in annual trade occurs (2011 estimate by the International Trade Cen- The relationship between efficient air trans- ter) among sovereign borders of the world. portation and modern airspace management Growth in trade continues, as illustrated in is well established in developed countries, Figure 2-1, even after the effects of the Great and is a necessary linkage when considering Recession of 2008-2009. infrastructure investment in a nation’s civil aviation system.

2 • 9 • NEXA • ATI Global Markets In the early 1980s, civil aviation authori- Figure 2-2 ties recognized the increasing limitations of Historical World Passenger and Freight km ground-based communications, navigation, Performed and surveillance systems comprising the 500,000 450,000 Passenger-km (ten millions) ATC systems of the time. New emerging CNS 400,000 Freight Tonne-km (millions) technologies offer the CAAs an opportunity 350,000 to support new CNS/ATM operations con- 300,000 250,000 cepts that could not otherwise be cost-effec- 200,000 tively implemented. 150,000 100,000 The need to overcome the limitations of ter- 50,000 restrial-based CNS systems is driven by eco- - nomic and institutional imperatives. Devel- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 oping and implementing the new CNS/ATM Source: ICAO systems requires technological innovation as well as investment in restructuring most While the escalation in air traffic has been traditional aviation roles and relationships much greater than growth in national econ- among nations. Therefore, states must care- omies, economic theories and studies such fully analyze and balance the complex link- as this indicate that the high correlation be- ages between: tween the two is primarily determined by two distinct elements of economic develop- • The requirements for modern CNS/ATM ment: infrastructure, driven by safety and other considerations perhaps social or polit- • Commercial activity and trade have a di- ical in nature. rect impact on the demand for business travel and air freight. • The limiting reality of economic resources. • Developments in personal income affect the level of consumer purchasing power • Forces driving international competition and the propensity to undertake leisure to sustain competitive advantage in the travel. dynamic global market environment. Other factors which have affected traffic demand include changes in airline costs, which GDP Growth directly affect airfares and cargo rates, avail- The air transport industry has for many years ability of air services, regulatory develop- experienced greater growth than most oth- ments, and tourism. er industries. Figure 2-2 highlights the his- Relentless advances in new technology have torically documented growth of passenger, had a dramatic impact upon demand, a fact freight, and air mail transport during the that will become even more evident during past five decades. This is a direct result of the next 20 years. Rapid passenger travel demand for air transport being primarily growth in the 1960s coincided with the re- driven by economic development and trade. placement of piston-engine aircraft with jet Increasing demand for passenger and freight aircraft, which in turn led to reduced real services, rapid technological development, fares and increased speed (convenience and and associated investment have combined utility), and improvements in the comfort of to multiply the output of the industry by a travel. Limitations are being reached in air factor of about 75 since 1950 (in terms of capacity, and new ATC equipment and proce- tonne-kilometers performed). To put this dures will be able to deal with this challenge into perspective, the total world GDP, which (the topic of this report). is the broadest available measure of world output, has multiplied by less than six times Higher oil prices in the last decade have had over the same period. a restraining effect upon traffic demand that continues today. The ten-fold increase in jet

2 • 10 • NEXA • ATI Global Markets fuel prices on the world markets since the tries back to the pre-recession growth trend 1970s has greatly increased operating costs of a little more than two percent. and hence ticket prices for travel and fees for air cargo. Through 2010 (and continu- In 2012, emerging economies will slow in ing throughout the middle of 2012) GDP in growth by 0.7 percent on average, dropping advanced economies grew by an estimated from 6.3 percent growth in 2011 to 5.6 per- 1-1.5 percent in real terms, as shown in Fig- cent in 2012, partly as a result of slower ex- ure 2-3. ICAO regions varied dramatically in port growth and partly because several have their economic performance. Asia Pacific re- been growing above trend. From 2017-2025, gions led the world in growth. emerging and developing countries are projected to grow at 3.3 percent. Many econo- Figure 2-3 mies will begin to show signs of maturing, Global Outlook for Growth of GDP to 2025 at which point the rapid catch-up growth 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% abates. US EU-15* Japan Other advanced** The greatest challenge for the global econ- Advanced Economies omy in this slow-growth environment is to China 2017 - 2025 raise productivity without losing job oppor- India 2013 - 2016 Other developing Asia 2012 tunities for the millions who are looking for Latin America Middle East reasonably paid jobs to support their living Africa Central & Eastern Europe standards. The global growth rate of per Russia and other CIS*** Emerging Market and Developing Economies capita income has been around 2.5 percent

World since the beginning of the current century, but sometime between 2017 and 2025 this Source: The Conference Board rate is expected to fall below two percent. In contrast to the last half century, that slow- According to a 2012 Conference Board re- down will also be accompanied by slower port, until at least the middle of the next population growth. decade, global growth is likely to slow. A recovery in advanced economies will be more than offset by a gradual slowdown in emerg- External Debt and Trends ing ones as they mature, with the net result Investment in ATI and supporting infrastruc- that global growth will slow. But the biggest ture (e.g., airports, roads, etc.) is critical to risk ahead for the global economy is not this continuing growth in trade, which further slower overall growth in output but a slow- accelerates demand for air transport. Exter- down in average output per capita, which nal debt associated with infrastructure in- will determine how fast living standards can vestments in developing countries accounts be supported and raised. for some 35 percent of total debt, with the Global growth is projected to increase to 3.5 remaining 65 percent in education, environ- percent in 2012, accelerate somewhat to 3.6 ment, and consumption. The total debt of all percent from 2013-2016, and then show a developing countries, including short-term further slowdown to 2.7 percent from 2017- debt, was estimated at about 100 percent of 2025. At three percent, on average, global GDP, as shown in Figure 2-4. growth will still be somewhat higher than the period 1980-1995 but between half and a full percentage point below the growth rate from 1995-2008.

Advanced economic growth is expected to slow down from an already meager 1.6 percent in 2011 to 1.3 percent in 2012. For 2013- 2016, the outlook suggests some recovery in advanced economies, bringing these coun-

2 • 11 • NEXA • ATI Global Markets Figure 2-4 vantage through implicit recognition Total Debt to GDP of the economic challenges facing 160.0

140.0 their customers, and offer solutions

120.0 that can overcome technical, finan- 100.0 cial and policy barriers. 80.0

60.0

40.0 2.1.1 Airport Infrastructure

20.0

0.0 An estimated 47,800 airports provided do- Italy

Chile mestic and military service globally as of Jan- Israel Spain Korea France Poland Ireland Austria Greece Iceland Mexico Finland Canada Norway Sweden Belgium Slovenia Hungary Portugal Australia Denmark Germany uary 2012. Of these, 6,977 airports accepted Switzerland Netherlands Luxembourg New Zealand New United States United Czech Republic United Kingdom commercial traffic spanning the globe. Source: OECD Most airports are owned by local, regional, or As will be discussed in later sections, the most national government bodies that sometimes difficult issue facing governments in modern- lease them to private corporations that over- izing infrastructure, of which CNS/ATM sys- see operations. For example, BAA Limited tems comprise an element, arises from the operates seven of the commercial airports in need to find sources of capital. Extreme debt the UK, as well as several other airports out- loads are driving the governments of devel- side of the UK. Germany’s Frankfurt Airport oped, developing, and emerging nations to is managed by the quasi-private firm Fraport. consider the most practical recourse for their In India, GMR Group operates, through joint ANSPs, such as public-private partnerships, ventures, Indira Gandhi International Airport corporatization, and even privatization. The and Rajiv Gandhi International Airport. The largest single air traffic control organization GVK Group controls Bengaluru International in the world, the FAA, is under such scruti- Airport and Chhatrapati Shivaji International ny. Having once rejected the concept, the US Airport. The rest of India’s airports are man- government is beginning to reconsider cor- aged by the Airports Authority of India. poratization of the FAA (work on this was last seriously undertaken in the 1990s) in order In the US, commercial airports are generally to streamline and bring further into line the operated directly by government entities or fiscal challenges of managing, financing, and government-created airport authorities (also modernizing its ATC infrastructure. known as port authorities), such as the Los Angeles World Airports authority that over- Key Points: sees several airports in the greater Los Ange- les area, including Los Angeles International • Enormous pressures will remain for Airport. governments and ANSPs to invest in ATI modernization. In Canada, the federal authority Transport Canada divested itself of all but the remotest • Pressures will increase as congestion airports by 2000. Now, most airports in Can- and other problems exact costs on ada are owned and operated by individual trade and commerce, and on stake- legal authorities or are municipally owned. holder industries such as manufac- Some US airports lease part or all of their fa- turing. cilities to outside firms, which operate func- • As countries and regions refine their tions such as retail management and parking. In the US, all commercial airport runways are economic policies to improve their certified by the FAA under the Code of Fed- competitive positions, higher - prior eral Regulations Title 14 Part 139, “Certifica- ity will be given to ATI. tion of Commercial Service Airports” but are • Companies competing for ATI busi- maintained by the local airport under the ness will increase their market ad- regulatory authority of the FAA.

2 • 12 • NEXA • ATI Global Markets Despite the reluctance to privatize airports Along this dimension, the 25 busiest airports in the US (although the FAA has sponsored handle a total of 700 million passengers, or a privatization program since 1996), the about 30 percent of the world total of sched- government-owned, contractor-operated uled and non-scheduled passengers. The (GOCO) arrangement is a popular standard heaviest concentration of traffic is found at for the operation of commercial airports in 17 US airports, ranking by passenger embar- the rest of the world. Some of the largest kations. airports in the world can be benchmarked using international and domestic passenger There are significant differences between embarkations as a measure. the rankings of airports by passengers and by movements. For example, Tokyo Haneda Figure 2-5 ranks fourth in terms of passengers handled, Top 30 Airports by Movements for year ending but 36th in terms of aircraft movements. This Jan. 2012 difference illustrates the heavy orientation Airport Total of these airports to wide- bodied aircraft. ATLANTA GA, US(ATL) 930,260 The world’s busiest airports by movements CHICAGO IL, US(ORD) 878,465 are listed in Figure 2-5. To expand capacity, DALLAS/FORT WORTH TX, US(DFW) 645,124 including new runways, gates, and passen- DENVER CO, US(DEN) 620,278 ger capacity, two classes of airport projects LOS ANGELES CA, US(LAX) 611,401 are underway. In the last 10-15 years, new CHARLOTTE NC, US(CLT) 543,818 international airports have opened at less than 20 locations worldwide. Major airport BEIJING, CN(PEK) 540,114 expansions are underway in all regions of LAS VEGAS NV, US(LAS) 535,742 the world. In fact, many airports are in a con- HOUSTON TX, US(IAH) 528,385 stant stage of renewal and upgrading. PARIS, FR(CDG) 510,237 Future growth in civil aviation capacity via FRANKFURT, DE(FRA) 485,020 airport expansion will take place in an atmo- LONDON, GB(LHR) 480,503 sphere of increasing public concern regard- PHOENIX AZ, US(PHX) 461,335 ing the environment. Until recently, the most PHILADELPHIA PA, US(PHL) 448,614 important environmental problem associat- AMSTERDAM, NL(AMS) 440,327 ed with civil aviation was aircraft noise. Noise levels near airports are subject to two op- DETROIT MI, US(DTW) 439,839 posing trends: quieter aircraft and increasing MINNEAPOLIS MN, US(MSP) 431,254 traffic. The noise issue requires months of TORONTO ON, CA(YYZ) 430,988 environmental impact studies, and in some SAN FRANCISCO CA, US(SFO) 412,302 countries can waylay development of new NEWARK NJ, US(EWR) 412,085 runways or expansion of existing terminals MADRID, ES(MAD) 411,070 for years. MUNICH, DE(MUC) 406,979 Estimates of construction costs for glob- NEW YORK NY, US(JFK) 406,875 al airport work over the next ten years run MIAMI FL, US(MIA) 397,885 into the hundreds of billions of dollars. This TOKYO, JP(HND) 385,222 is due to the costly orientation of such projects toward real-property transactions, and BOSTON MA, US(BOS) 369,351 the need for airport runways and facilities NEW YORK NY, US(LGA) 365,591 to be strategically located near population MEXICO CITY, MX(MEX) 363,423 centers. However, environmental concerns GUANGZHOU, CN(CAN) 357,890 create new hurdles that make even existing JAKARTA, ID(CGK) 356,252 airport expansion costly. Source: Airports Council International

2 • 13 • NEXA • ATI Global Markets 2.1.2.1 Airport Revenues Figure 2-6 Percent of Non-Aviation Revenues by Airport in Airports around the world have a role in fi- 2009 nancing and provisioning ATI infrastructure. About 35 percent of airports outside the major economies have responsibility for ATI for aircraft takeoffs, landings and, from time to time, overflights. In the US, the ATI mandate is largely federal, and the FAA must provision CNS/ATM, but many US airports enhance their operations and aircraft movements by separately financing a range of CNS/ATM ground systems, including landing systems, lighting systems, navigation, and ADS-B (Au- tomatic Dependent Surveillance Broadcast) facilities. Source: Air Transport Research Society

Many different types of financing are avail- Strategically set lower landing fees can at- able for airport construction or expansion, tract more flights. Some airports, especially and local laws and practices usually apply. general aviation (GA) airports, do not charge Capital projects are almost always financed landing fees. through collection (and sometimes securitization) of landing fees and airport improve- Landing fees may encompass additional air- ment fees (e.g. PFCs), as well as cash flows port-provided services. Some airports will from other airport operations-related reve- simply charge a single fee for landing and nues (e.g. parking or concession fees). provide gates and check-in facilities as part of that fee. Other airports will charge a lower There may be a correlation between the fee for landing but will charge airlines for the amount of traffic an airport can manage and use of gates and check-in facilities. its fees, based on the assumption that a larger airport can handle more traffic and thus Landing fees cannot easily be compared as spread the total airport maintenance and they are affected by a wide range of factors. operating costs out over more carriers, as For example, many airports in the US receive well as being able to generate more revenues subsidies from the FAA, while airports in from concessions, retail, parking, and other other countries do not. Fees can be based on services. Figure 2-6 shows that non-aviation any number of factors including: revenues can account for as much as 85 percent of total revenues. • Aircraft weight.

• Number of seats. Landing Fees • Time of day. A landing fee is a charge paid by an aircraft operator or airline to an airport company for • Aircraft home airport. (Some airports do landing at a particular airport. Landing fees not charge fees for aircraft based at that can vary greatly among airports, with the airport or offer a lower fee for them.) largest fees paid at congested airports, ones where most of the landing slots are held by • Operator class. (Some airports may airlines, while less congested airports charge charge a fee for specific types of opera- less because of lower demand. The money tors, like commercial air carriers, but not generated by landing fees is used to pay for other aircraft operators, such as general the maintenance or expansion of the air- aviation.) port’s buildings, runways, aprons, and taxi- ways.

2 • 14 • NEXA • ATI Global Markets Airport Improvement Fees • Almost all Brazilian airports adminis- tered by Infraero. An airport improvement fee, embarkation fee, airport tax, service charge, or service • All airports in China. fee is an additional fee charged to departing and/or connecting passengers at an airport. It is levied by a government or an airport 2.1.2.2 Airport Project Financing management corporation, and the proceeds Airport project finance is the long-term fi- are usually intended for funding major air- nancing of infrastructure and industrial proj- port improvements or expanding airport ser- ects based upon the projected cash flows of vice. Some airports do not levy these fees on the project rather than the balance sheets connecting passengers who do not leave the of the project sponsors. Usually, a project airport or whose connecting flight is within a financing structure involves a number of eq- specific timeframe after they arrive. Depend- uity investors, known as sponsors, as well as ing on the location, the airport improvement a syndicate of banks or other lending insti- fee is included in the cost of a passenger’s tutions that provide loans to the operation. airline ticket, in which case the airline will The loans are most commonly non-recourse forward the fee to the proper entity. A small loans, which are secured by the project as- sample of airports currently collecting an ex- sets and paid entirely from airport-produced plicit airport improvement fee includes: revenues and cash flow, rather than from • Jorge Chavez International Airport Lima, the general assets or creditworthiness of the Peru. project sponsors, a decision in part supported by financial modeling. The financing is • Ministro Pistarini International Airport typically secured by all of the project assets, (Ezeiza), Buenos Aires, Argentina. including revenue-producing contracts. Proj- ect lenders are given a lien on all of these as- • Ramón Villeda Morales International sets and are able to assume control of a proj- Airport San Pedro Sula, Honduras. ect if the project management company has difficulties complying with the loan terms. • Ngurah Rai Airport (Denpasar), Bali, In- donesia. Generally, a special purpose entity is created for each project, thereby shielding other • Indira Gandhi International Airport New assets owned by a project sponsor from the Delhi, India. detrimental effects of a project failure. As a special purpose entity, the project company • Soekarno-Hatta International Airport Ja- has no assets other than the project. Capital karta, Indonesia. contribution commitments by the owners of • Carrasco International Airport, Montevi- the project company are sometimes neces- deo, Uruguay. sary to ensure that the project is financially sound or to assure the lenders of the spon- • Norwich International Airport, Norwich, sors’ commitment. Project finance is often United Kingdom. more complicated than alternative financing methods. Traditionally, project financing has • Newquay Cornwall Airport, Newquay, been most commonly used in the extractive United Kingdom. (mining), transportation, telecommunications, and energy industries. • Ireland West Airport Knock, Knock, Re- public of Ireland. More recently, particularly in Europe, project financing principles have been applied • Ninoy Aquino International Airport, Ma- to other types of public infrastructure under nila, Philippines. public–private partnerships (PPP) or, in the UK, a pioneer in this new method, private • Almost all Canadian international air- finance initiative (PFI) transactions (e.g., for ports.

2 • 15 • NEXA • ATI Global Markets school facilities, as well as sports and enter- ment departments, state-owned companies, tainment venues.) or privatized organizations.

Risk identification and allocation is akey CANSO component of airport project finance. A The majority of the world’s ANSPs are mem- project may be subject to a number of tech- bers of the Civil Air Navigation Services Or- nical, environmental, economic, and political ganization (CANSO), a group with increasing risks, particularly in developing countries influence in policy setting and harmoniza- and emerging markets. Financial institutions tion matters. CANSO has become the glob- and project sponsors may conclude that the al voice of the companies and agencies that risks inherent in project development and provide air traffic control, and represents the operation are unacceptable (unfinanceable). interests of air navigation service providers To cope with these risks, project sponsors in worldwide. CANSO members are responsible these industries are generally completed by for supporting 85 percent of world air traffic a number of specialist companies operating and, through various workgroups, members in a contractual network with one another share information and develop new policies, that allocates risk in a way that allows financ- with the ultimate aim of improving naviga- ing to take place. Several long-term contracts tion in the air and on the ground. CANSO such as construction, supply, off-take, and also represents its members’ views in major concession agreements, along with a variety regulatory and industry forums, including at of joint-ownership structures, are used to ICAO, where it has official observer status. align incentives and deter opportunistic be- CANSO seeks to: havior by any party involved in the project. The various patterns of implementation are • Maintain an international forum for the sometimes referred to as “project delivery development and exchange of ideas on methods.” The financing of these projects current ATM-related issues and the for- must also be distributed among multiple mation of distinct policies and positions. parties, so as to distribute the risk associated with the project while simultaneously ensur- • Develop an international network for ing profits for each party involved. ANS experts to enable further information exchange between specific ANSPs A riskier or more expensive project may re- and other stakeholders for the promo- quire limited recourse financing secured by tion of best practice within ATM. a surety from sponsors. A complex project finance structure may incorporate corporate • Liaise with other transport industry finance, securitization, derivatives, insurance stakeholders, particularly the airlines, or other types of collateral enhancement to industry suppliers, and airports, to the mitigate unallocated risk. overall benefit of the aviation industry.

Airport project finance shares many charac- • Contribute to the continuous global air teristics with maritime finance and aircraft transport debate through the presen- finance; however, the latter two are more tation and promotion of the ANSP per- specialized fields within the area of asset fi- spective across the range of contempo- nance. More is said on this topic expressly rary issues in the industry. regarding air traffic infrastructure finance in Section 3 of this report. • Represent the views and interests of members at relevant international institutions, particularly ICAO. 2.1.2 ANSPs and Finances • An ANSP is an organization that is vested in Promote and support international legis- legal and regulatory authority to separate lation, regulations, and agreements that aircraft on the ground or in flight in a dedi- strengthen the position of members. cated block of airspace, on behalf of a state or a number of states. ANSPs are govern-

2 • 16 • NEXA • ATI Global Markets Figure 2-7 NAMA Current CANSO Members by Category Type NANSC Category 1 Category 2 (Require Non-rep- NATA resentation Clause) National Airports Aena ANWS Corporation Lim- AEROTHAI Aeroportos de Moçambique, ited E.P. NATS Airport & Aviation CAAS NAV CANADA Services (S.L.) Ltd (AASL) NAV Portugal Airports Authority DCA Cyprus Naviair of India OACA Airservices Aus- DECEA Oro Navigacija tralia PANSA Airways New Zea- FAA land PNG Air Services Ltd ANS of the Czech GACA Republic Prishtina Interna- tional Airport J.S.C. ATNS GCAA PT Angkasa Pura II Austro Control Hellenic Civil Aviation Author- (Persero) ity ROMATSA Avinor Luxembourg ANA Sakaeronavigatsia AZANS Maldives Airports Co. Ltd Ltd Belgocontrol SENEAM Serco BULATSA State ATM Corporation skyguide CAA Uganda Civil Aviation Authority of Ban- Slovenia Control gladesh (CAAB) SMATSA CARC Kenya Civil Aviation Authority UkSATSE DFS Deutsche U.S. DoD Policy Board on Fed- Flugsicherung eral Aviation Angkasa Pura I GmbH Israel Airports Au- DHMI thority DSNA Tanzania Civil Avia- tion Authority EANS Dirección Gener- ENAV S.p.A. al de Control de Finavia Corpora- Tránsito Aéreo tion (DGCTA) HungaroControl Source: CANSO Pte. Ltd. Co. Irish Aviation Au- CANSO has a number of standing commit- thority tees and workgroups which deliver policy ISAVIA Ltd and set standards on behalf of the mem- Kazaeronavigatsia bers. They bring together global experts to LFV address issues of common interest, to exchange experience for the promotion of best LGS practice, and to develop specific policies LPS SR, š.p. across a broad spectrum of issues. Standards LVNL committees and workgroups include: MATS • MoldATSA The Operations Standing Committee (OSC): Airspace Services Harmonization; NAATC AIS-AIM; Operational Performance Met-

2 • 17 • NEXA • ATI Global Markets rics; Collaborative Airspace; and Environ- vided for international civil aviation. The pol- ment. icies are intended for the guidance of contracting states and are non-binding. • Policy Standing Committee: Bench-marking; Global Benchmarking; Human Resources; and Quality Manage- Cost Basis ment. ICAO considers that, as a general principle, where air navigation services are provided • Safety Standing Committee: Future for international use the providers may re- SMS Development; Operational Safety; quire the users to pay their share of the re- Safety Performance Measurement; and lated costs; at the same time, international SMS Capability. civil aviation should not be asked to meet Full membership is open to all ANSPs regard- costs which are not properly allocable to it. less of their legal status, including ANSPs that ICAO encourages its member states to main- are integrated within government structures tain accounts for the air navigation services and departments. Members not separated they provide in a manner which ensures that from their governments are able to sign an air navigation services charges levied on in- article of membership which explicitly recog- ternational civil aviation are properly cost nizes that CANSO does not represent the na- based. tional government of the ANSP’s home state ICAO also recommends that when establish- in any way (Figure 2-7). ing the cost basis for air navigation services The associate membership of CANSO is charges, the following principles should be drawn from a wide range of companies applied and organizations across the entire aviation • The cost to be shared is the full cost of industry involved in the delivery of air traf- providing the air navigation services, fic services. Membership offers them the including appropriate amounts for cost chance to network both formally and infor- of capital and depreciation of assets, as mally with clients and key decision- makers well as the costs of maintenance, oper- across the aviation industry. Associate mem- ation, management, and administration. bers are also encouraged to lend their expertise to CANSO’s work programs and help it to • The costs to be taken into account should continue improving the delivery of air navi- be those assessed in relation to the fa- gation services. cilities and services, including satellite services, provided for and implemented 2.1.3.1 ANSP Revenues under the ICAO Regional Air Navigation Plan(s), supplemented where necessary ANSP revenues are set by policies whose pursuant to recommendations made by specific rates and charges are determined the relevant ICAO Regional Air Naviga- through a myriad of stakeholder inputs, as tion Meeting. well as governance or approval processes. ANSPs are pressured to charge fees in a uni- Much more can be found on the policy side form manner. by studying ICAO’s Policies on Charges for Airports and Air Navigation Services. In prac- ICAO guidelines for ANSP charges and fees tice, ANSPs and umbrella organizations man- are often cited when examining such costs aging the affairs of some of them seem not to airlines and others. ICAO’s Policies on to have a uniform approach to cost-based Charges for Airports and Air Navigation Ser- charging, claiming instead that they adhere vices, which follows, contains the recom- to the spirit of the “voluntary” ICAO guide- mendations and conclusions of the council lines. resulting from ICAO’s continuing study of charges in relation to the economic situation We discuss several examples here to bring of airports and air navigation services pro- details to light. More information, by coun-

2 • 18 • NEXA • ATI Global Markets try, can be found in the appendix to this re- other ministries oversees management port. and represents employee interests. Reg- ulatory oversight is a government affair, France: DSNA – Direction des services de la while DFS has operational responsibility. navigation aerienne Transport Ministry reviews and approves • Organization: Government agency, any changes in user fees and has an in- 7,618 employees, 4,113 controllers, es- dependent economic regulatory author- tablished in March 2005. Revenue: €1.2 ity to comply with the requirements of billion ($1.47 billion.) the forthcoming Single European Sky initiative. • Governance: DSNA and the Civil Avi- ation Authority (DGAC) fall under the • Fee Structure: Funded through user Ministry of Transport. As a result of the fees from aircraft operators and revenue change of the air navigation department from aeronautical information services (DNA) to the air navigation services de- and consulting services. EUROCONTROL partment (DSNA), DSNA is focused on collects en route charges on behalf of air navigation services and no longer has contracting states for en route air- nav responsibility for regulations. The Stra- igation services and facilities which are tegic and Technical Affairs Department used by aircraft in the airspace of the of the Ministry (DAST) has assumed this flight information regions of Germany. role. Overdue charges are subject to interest on late payment and recovery enforce- • Fee Structure: Two types of charges ment measures. DFS bills and collects are levied on air navigation users: route terminal charges for services and facili- charges and terminal charges. Route ties for aircraft during take-off and land- charges represent remuneration for the ing at German airports. The charge is im- use of facilities and services, implement- mediately due. If payment is delayed by ed by France above metropolitan areas more than one month, a penalty charge and their vicinity, for en route air traffic may be added. and movements, including radio communications and meteorological services. United Kingdom: UK NATS Charges are calculated and collected by • Organization: PPP was established in EUROCONTROL based on multilateral 2001 with the following ownership: 49 route charge agreements. The terminal percent government, 5 percent NATS charges are due at the time of each take- staff, 42 percent airline, and 4 percent off from an airport belonging to the field Airport Authority. 3,758 employees, of application of the terminal charges. 1,380 controllers. Privatized 2001. Rev- The French unit charge is lower than the enue: £599 million ($940 million.) EUROCONTROL average and below most rates of comparable European countries. • Governance: NATS has a board of direc- Terminal service charges have recently tors, in which there are representatives increased. of each group that holds an ownership interest, as well as the public. CAA exer- Germany: German Air Traffic Control (DFS) cises economic regulation over NATS. • Organization: Public-private partner- • Fee Structure: Fees are calculated based ship. 5,400 employees, 2,098 control- on chargeable service units (CSU), cal- lers. Privatized in 1993. Revenue: €923 culated from the distance flown by an million ($1.13 billion). aircraft in controlled airspace and its • Governance: Governed by board of weight. Recently, NATS charged £48.47 managing directors consisting of three ($76.06) per CSU. All other European air executives. A supervisory board of six traffic service providers use the same employees and six representatives from formula to determine their charges to airspace users.

2 • 19 • NEXA • ATI Global Markets Canada: NAV CANADA services and decides to accept or reject proposed price changes. • Organization: Privately-owned company, 5,400 employees, 2,300 controllers. • Fee Structure: Airservices’ new five- Privatized 1996. Revenue: C$1 billion year, long-term pricing agreement for en ($996 million). route, terminal navigation, and aviation rescue and firefighting services was- ef • Governance: Governed by a 15-member fective in October 2011. The agreement board of directors consisting of repre- offers price certainty to industry and fol- sentatives from airlines (4), government lows industry consultation and review by (3), unions (2), business and general avi- the Australian Competition and Consum- ation (1), independent stakeholders (4), er Commission (ACCC). and president and CEO of NAV CANA- DA (1). The Canadian Transport Agency (CTA) reviews the price-setting process 2.1.3 ATI Economic Drivers against an established set of principles. In September 1991 at the 10th ICAO Air Nav- NAV CANADA is legislatively required to igation Conference held in Montreal, ICAO place all revenues in excess of costs in its members acknowledged that growth in air rate stabilization fund. commerce, coupled with advancement in technology, is forcing a shift from region- • Fee Structure: Funded solely through air al to global means for CNS. The conferees navigation fees levied on aircraft - oper agreed on the need for global coverage, ators. NAV CANADA charges are based digital air-to-ground data interchange, and on the use of metric units and have non-precision navigation/approach services, two components: 1) base rate — set to concluding that satellite-based CNS systems meet the corporation’s annual financial will likely be the key to worldwide improve- requirements; and 2) variable rate — ments. Eighty-five nations initiated planning mechanism used to recover prior period for the transition to a common global CNS/ shortfalls or return prior period surplus- ATM system. The parties agreed on the need, es. A fee structure is in place to collect: vision, and technical approach concerning daily, quarterly, annual fees; en route the future air navigation system. charges; oceanic charges; extra services charges; and terminal service fees. The reality is that payment for and transition and integration to/of new systems are Australia: Airservices Australia the most difficult institutional problems fac- • Organization: Government-owned coming CNS/ATM system designers and program pany. 2,900 employees and 1,100 con- managers. Many of the details are driven trollers. Corporatized 1988. Revenue: by regulatory, bureaucratic, and even trade A$900 million ($944 million). considerations. Below are some of the more prominent issues being considered. • Governance: Governed by a board of directors appointed by the Minister for Transport and Regional Services. The 2.1.4.1 Pressures and Pace of Change in board is responsible for deciding the Global Trade objectives, strategies, and policies to In the last two decades, increased global- be followed by Airservices and ensur- ization and intensified competition in world ing that Airservices performs its func- trade has resulted not only from the liberal- tions in a proper, efficient, and effective ization of trade policies in many countries, manner. The board appoints a CEO. The but also from major technological advances Australian Competition and Consumer in communications, transportation systems, Commission (ACCC), an independent etc. These developments have transformed commonwealth authority, oversees the the traditional organization of production process of setting user fees for air traffic and marketing to focus on the management of logistics to achieve cost savings in inven-

2 • 20 • NEXA • ATI Global Markets tory and working capital and permit a timely an explicit focus on addressing the needs of and appropriate response to changing con- developing countries. According to a Euro- sumer demands. pean Union statement, “The 2008 Ministeri- al meeting broke down over a disagreement As the world’s economies become more between exporters of agricultural bulk com- closely integrated, dependency on travel and modities and countries with large numbers communications will also grow. Acceleration of subsistence farmers on the precise terms of these trends through regional trading alli- of a ‘special safeguard measure’ to protect ances began with the 1992 European Com- farmers from surges in imports.” The Euro- mission, the 1993 North America Free Trade pean Commission states, “The successful Agreement (NAFTA), the 1995 World Trade conclusion of the Doha negotiations would Organization (WTO), and others. A trade confirm the central role of multilateral liber- pact is a wide-ranging tax, tariff, and trade alization and rule-making. It would confirm agreement that often includes investment the WTO as a powerful shield against pro- guarantees. The most common trade pacts tectionist backsliding.” (As of July 2012, the are of the preferential and free trade types future of the Doha Round remains uncertain. concluded to reduce (or eliminate) tariffs, The work program lists 21 subjects for which quotas, and other trade restrictions on items the original deadline of January 2005 was traded among the signatories. Through missed.) these and several pending regional trade agreements, the reliance upon air transport A component of WTO is an annex on air increases in measurable amounts. Whether transport services which would apply to these increases in air services are sustain- certain aspects such as repair and mainte- able is a matter for review later in this study. nance of aircraft, sale and marketing of air transportation, and computer reservation The purpose of the World Trade Organization systems. is to supervise and liberalize international trade. The organization officially commenced As trading blocs are formed within and on January 1995 under the Marrakech among ICAO regions, air transport and asso- Agreement, replacing the 1948 General ciated modernization initiatives are expect- Agreement on Tariffs and Trade (GATT). The ed to increase dramatically. WTO deals with regulation of trade between participating countries. It provides a frame- work for negotiating and formalizing trade 2.1.4.2 Infrastructure as a Competitive Tool agreements and a dispute resolution pro- Inadequate and unreliable infrastructure cess aimed at enforcing participants’ adher- (e.g., air, sea, and land transportation; pow- ence to WTO agreements, which are signed er; telecommunications; water; and sani- by representatives of member governments tation) cripples the ability of countries to and ratified by their parliaments. engage in international trade, even of traditional export commodities. In fact, the fight Most of the issues that the WTO focuses for new export markets is highly dependent on derive from previous trade negotiations, upon infrastructure. Figure 2-8 shows which especially from the Uruguay Round (1986– countries and regions are the most compet- 1994). For WTO participants, the resulting itive based on the Global Competitiveness increase in national income is expected to Report. result from more efficient use of domestic resources (e.g. movement of goods) when domestic distortions such as trade barriers are reduced or removed, and increased access to markets of trading partners.

The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with

2 • 21 • NEXA • ATI Global Markets Figure 2-8 structure is essential to create the pro- Global Competitiveness Index ductivity gains from urbanization. When infrastructure problems result in congestion and negative net impacts on the environment, the growth potential of an economy arising from urbanization is sacrificed. Improved infrastructure reduces worker time spent on non-productive activities and improved health. Finally, efficient production and financing of infrastructure services can reduce wasteful consumption of land, water, or fuel, and contribute to protection of nat- ural resources.

Source: World Economic Forum • Raising the quality of life: Infrastructure creates amenities in the physical envi- Impact of ATI on Economic Development ronment, such as cleaner water and air, The nature and channels of infrastructure’s and provides spatial order, zoning, etc. It impact on economic development can be also provides outputs which are valued characterized by: in their own right such as easy transportation and communication services. • Economic growth through reduced cost of production: In an aggregate sense, Financing has important implications for the character and availability of infra- economic stability. In poor and wealthy structure influences the marginal pro- countries alike, infrastructure investment ductivity of private capital. This can be can generate employment and consumer measured through reduced production demand in countercyclical conditions. If in- costs. Infrastructure affects profitability, frastructure projects are well chosen, the levels of output, income, and employ- benefits can be long-term. ment, particularly for small enterprises. It has a continuing impact on the costs The positive impact of the above factors upon and service quality in international the air transport community is wide-ranging trade, which determines competitive- and usually highly visible. The community ness in import/export markets. Finally, includes the usual stakeholders in the in- it has an impact on domestic transaction dustry: airlines, airports, civil agencies and costs and access to market information, the traveling public. The positive impacts of thus permitting the economy to enjoy investment in airports, aircraft, and related efficiency gains from policies of market goods or assets will derive primarily from the liberalization. services generated. Four conditions are necessary to realize the greatest impact of ATI • Economic growth through structural im- and related CNS/ATM modernization upon pacts upon demand and supply: Infra- any nation’s economic health and are magni- structure contributes to diversification fied when applied to developing economies: of economies. For example, advanced telecommunications provides access to The national economic climate should be application of technology in many - sec conducive to an efficient allocation of re- tors. It is also key to the economy’s abili- sources, thereby reducing the potential for ty to adjust the structure of demand and investment in infrastructure to take resourc- production in response to changing price es away from more productive investment. signals. For example, why invest in modern ATC equipment when only certain aircraft can en- • Economic growth through increase ter a certain region of a country on a charter in productivity of other factors: Infra- basis.

2 • 22 • NEXA • ATI Global Markets ATI projects can only create synergies with will compete largely in capital markets with other infrastructure given a sufficient com- funds required for other industrial sectors. plement of other necessary resources. For If government is a financial contributor to example, airport modernization cannot take these modernizations, lengthy delays can be place until roadways have the capacity to expected, as most governments are cash- carry increased traffic flows. strapped. (See per capita debt figures of each of the countries or regions in the Ap- Infrastructure that balances both production pendix of this study.) The most likely scenar- and consumption of goods and services will io will be the corporatization or privatization have the longest-term impact. For example, of much of the CNS/ATM infrastructure. Gov- in CNS/ATM modernization, developing the ernment-backed bond funding can occur in navigation augmentation systems (such as a cycle tied to needs, as opposed to political the FAA Wide Area Augmentation System, or agendas. WAAS, program) in accordance with national policies for spatial referencing in non-avia- Environmental: Environmental concerns tion markets will benefit consumers. (Garmin pose the greatest challenge in infrastructure automobile navigators give consumers a set- development and include noise, emissions, up choice between WAAS or EGNOS. ) waste, and toxic materials from airport operations. Infrastructure will be better utilized when maintained and will impact the environment Institutional: The institutional dimension in- less if user charges are visibly levied and se- volves international, multinational, national questered for construction and maintenance and labor elements. International bodies led purposes. by ICAO and regional organizations, such as Europe’s ECAC, will play a continuing role in Choosing between infrastructure invest- standards setting, international treaty res- ments using cost- benefit analysis or eco- olutions, etc. At the airport level, it is often nomic rates of return provides some inter- the city or state/province/county that first esting insights. Infrastructure has been a eyes an airport as a source of tax revenue. major focus of World Bank lending since its The needs of the traveling public are second founding, and currently accounts for some to those of the tax collector, who is often 40 percent of its loans. oblivious to the importance of infrastructure maintenance and ATC systems upgrades. Key Issues to Expand ATI Investment Possible solutions to encourage investment The challenges of air traffic growth and ATC and expand ATI can generally be dealt with modernization can be driven by many other in four categories. external factors. Over the past five years, the world has seen enormous political changes, Technological: No technological barrier ex- and part of the fall-out of those changes has ists to resolve any of the airspace problems been the creation of new states that view — that is, the necessary technologies are participation in growing worldwide air com- available virtually off-the-shelf. For exam- merce as essential to their economic survival ple, air traffic management can be easily and independence. accommodated over the oceanic regions by ICAO’s Global Blocks initiative. The program 2.1.4.3 Liberalization and Deregulation of will utilize GPS and other satellite navigation Air Transport Services systems, as well as satellite communications, for surveillance and reporting purposes. ADS Air transport services continue their trend and automated en route ATC enhancements toward liberalization in and between grow- could greatly expand airway capacities. ing numbers of countries and a substantial number of new or amended bilateral air ser- Financial: The tens of billions of dollars vices agreements continue to be reported needed for all categories of ATI, including to ICAO. The essential steps include further CNS/ATM systems, avionics, and the like, opening of borders - possibly through a sim-

2 • 23 • NEXA • ATI Global Markets plified visa system liberalizing air transport • Measures of performance: This is an within each region and internationally, and organizational paradigm. Most civil avi- investing in infrastructure. ation agencies are not business-like entities with the systems and measures of performance needed to manage them- 2.1.4.4 De-Institutionalization of Civil Avia- selves efficiently. For example, the lack tion Agencies of visible, activity-based costing or finan- Most civil aviation agencies are of an - “ex cial systems will pose a hindrance to any tended enterprise” nature with important reorganization as it will be challenging to stakeholders who will need to understand put a stake in the ground (i.e., where we and have a continuing role in the many are versus where we would like to be) steps of the modernization process. Often when a performance yardstick is not yet the pathway chosen for modernization is available. through the corporatization or privatization of the civil aviation authority, in which case • Promoting international competitive- existing laws or regulations in place to pro- ness: In more developed countries, the tect the many stakeholders may dramatically rationalization of a nation’s domestic alter the pace of change. Below is a discus- or indigenous CNS/ATM technologies sion of some of these attributes and con- ensure that the civil aviation agency is straints: doing its part in helping industry to compete in the modernization of the world’s • Extended enterprise defined: A coun- ATC systems. Intensive civil agency lead- try’s federal legislative entity, local gov- ership and cooperation are needed to ernments, and airlines are all controlling define and develop standard, interoper- stakeholders with real veto powers, and able ATC systems, which are often used will often need to understand and have a to influence international standards. defining role in every step of the change process. This extended enterprise incor- 2.1.4.5 Privatization and Commercialization porates the concept of shared power, fragmented decision-making, and all-in- Functional failure is the classic economic ra- clusive strategic planning. tionale for government intervention in markets. Market failure is the inability of private • Safety mission: Restructuring actions markets to provide certain goods and ser- must not compromise safety. Safety vices even though that provision is economi- should be enhanced through a restruc- cally justified. Government market interven- turing program that emphasizes stream- tion may be: lining, simplification, efficiency, and improved investment in safety from funds • Direct: the legislation and administrative generated by lowering costs elsewhere. regulation of prices, quality of service, entry or exit. • Culture: The civil aviation agency of a country is a representative government • Indirect: through development of an- agency with the resident bureaucratic ti-trust regulation intended to control resistance to change, due in part to reg- firms in the unfettered exercise of their ulations governing its affairs. With the market power. FAA, for example, federal acquisition regulations and federal employment In both developed and developing countries, governance pose constraints not easily the markets for transport services have been overcome by the conventional restruc- a traditional subject of public control, going turing methodology which an indepen- well beyond the regulations that have health dent organization would select. Some and safety as their motives. Rate regulations changes (i.e., corporatization) will possi- in the railways, entry restrictions in the truck- bly require legislative action. ing business, and control of air routes are examples of the means available through regu-

2 • 24 • NEXA • ATI Global Markets lation to accomplish more than just supply of by the airlines, their passengers, and other essential services. The true economic test of users, not by general tax revenues. Certain whether regulations are appropriate may be controversy exists in the debate on airport to examine whether the regulation improves operations and control. The argument is the allocation of resources. That test is the made that privatization means passengers starting point of the decade-old global trend will have to pay a second time for airport toward regulatory reform, primarily through facilities. According to some, all analysis of privatization or commercialization of govern- privatization points toward higher costs for ment-run transportation facilities. the customer and irreparable damage to the very assets privatization is intended to en- Regulation is the alternative to privatiza- hance. These groups see no public benefits, tion, and while it tends to protect firms from such as capacity enhancement or increased competition, government monopolies are competition, inherent in the privatization of neither disciplined by the market nor by the airports. regulator. Privatization and deregulation are alternative ways to restore competitive pri- The airlines and organizations such as IATA vate markets to industries that governments generally oppose the total privatization or have traditionally controlled. outright sale of airports, believing that those local governments which subsidize airport In the global air transport industry, privatiza- operations — in an effort to attract air -ser tion is occurring at all levels and is encom- vice and retain jobs — will cease subsidi- passing airports, airlines, civil aviation -or zation totally. This, in turn, would result in ganizations, and even some ATC equipment higher operating costs for airlines and, con- suppliers. sequently, higher airfares for consumers. Experiences in many countries, however, ne- The significance of privatization or corporati- gate this theory. zation arises from the fact that many stakeholders are beneficiaries of efficient and safe While airport privatization is a matter of in- air transport, and the propensity to invest creasing demand for countries, it is difficult in modernized ATC systems and procedures to find common approaches as needs are increases once bureaucratic bottlenecks are not entirely common either. For example, lessened and available funds increase. the importance of airport management and privatization on ATC modernization varies Furthermore, because so many governments drastically among countries and regions. An today are financially constrained, they have essential component to ATC modernization political as well as financial reasons todis- in a small country may be the need to “bun- tance themselves from air transport policies. dle” financing for airport modernization with Privatization is often the only route to mod- ATC equipment upgrades and even aircraft ernization. Below are discussed the trends in fleet transformation. each of these categories. In larger, developed countries such as Ger- Airports many or Canada, it is not so easy to connect Today there is a trend for governments to airport modernization directly with ATM re- establish autonomous authorities for airport quirements linking airports. Countries where operations. According to investment and privatization programs at the airport level merchant bankers, airports are very attrac- are underway are generally the most likely tive investments because of the high quality to consider upgrading ATI and acquiring the cash flow providing superior dividend yield necessary funding. and capital growth through property-related development. Airlines Airline privatization impacts the CNS/ATM Industry stakeholders such as air carriers and modernization process in several ways. other interest groups claim that commercial Countries whose national airlines must com- airports have been “bought and paid for”

2 • 25 • NEXA • ATI Global Markets pete for international tourists need to offer not be privatized without significant penalty. competitive fares, safe and efficient flights, What is occurring across the world is more and reliable on-time service. This is especial- like a “denationalization” of air traffic con- ly the case with countries whose national trol, the process of liberating air traffic con- incomes are supplemented by tourism, such trol from the rigid structures and constraints as the Caribbean or the islands of the Pacific. of the state. Profit-making airlines or those whose role in national economies is strategic in nature are In general, arguments for privatizing air traf- much more vocal and active advocates of the fic services are similar among different coun- CNS/ATM modernization process. It is recog- tries. Key motivation factors favoring privat- nized that inefficient airspace infrastructure ization include: is usually a prime culprit in operating losses • or in national competitive disadvantage due Lack of state funds for modernization. to safety or efficiency concerns of Western • Weakness in the current ATC system travelers and tourists. brought about through institutional mis- The trend toward partial or full privatization alignments, extensive bureaucracy, and of the world’s airlines continues. Govern- cost inefficiencies. ments seek an acceptable balance between • Overly restrictive and debilitating- per perceived needs to attract foreign invest- sonnel recruiting policies. ment in these carriers and the desire to ensure that management and control remain • Strict procurement policies. with their nationals. Corporatizing and privatizing air traffic- ser Air Traffic Control and Civil Aviation Agencies vices will increase the flexibility to make air traffic improvements in a realistic timeframe The corporatization and/or privatization of and in a more business-like manner. The in- national air traffic management services creased efficiencies derived from airspace is one of the most significant trends to im- capacity improvements are anticipated to pact ATC modernization this decade. A re- translate into significant taxpayer savings. Ar- cent global recession and difficult econom- guments exist that safety enhancements will ic times impact the flying public, forcing all follow in a system more capable of absorbing nations, particularly those who are debt- the dramatic advances in ATC technologies strapped, to re-examine the way operations so long as implementation of needed mod- and CNS/ATM modernization are managed ernization occurs in a seamless improvement and financed. While corporatization is not program environment. a political altruism, often governments are reluctant to continue supporting air traffic Independence and financial autonomy have management services from their taxpayers’ their price. Prior to the privatization of an pockets. Thus, a shift to self-sufficiency can ATC organization, capital outlay for invest- be politically expedient. ments and costs for reducing risks are generally borne by the state. When an ATC orga- Privatization generally means private own- nization is privatized, it must be prepared for ership within a capitalist market economy higher initial expenditures and must there- or socialist market economy, an element of fore build appropriate reserves. Generosities direct competition and profit-driven deci- once shared by the state in user-cost calcu- sion-making. In terms of privatization of air lations will no longer apply following privat- traffic control systems organizations, the ization. The privatized ATC organization will major, or often sole, shareholder is the state. experience additional cost increases and will This is largely because air traffic control is be required to bill its users in full for services. partly a police and military matter and therefore is subject to state control. Therefore, in As a bureaucratic organization the fundamen- strict terms of national economic as well as tal tenet of ATC has been, and will remain, airspace sovereignty, air traffic control can- safety. Yet as an independent organization,

2 • 26 • NEXA • ATI Global Markets ATC must redirect its approach by becoming Additionally, the customer will be different. more cost-conscious and business-like. In In many instances today, modernization will any country that privatizes its air traffic man- occur through an international open tender. agement services, the government will like- Development banks such as the European ly remain in charge of the regulatory safety Bank for Reconstruction and Development function, while the management of the air (EBRD) seed modernization through full and traffic services operations is taken over by a open international competition. government-owned or board-overseen corporation. Making ATC organizations finan- Suppliers of CNS/ATM equipment who rec- cially independent of their respective gov- ognize this trend will be well served to sharp- ernments may sometimes be more costly. en their skills for the highly competitive open However, with the additional accountability bidding scenarios of future modernizations. for safety through airline oversight and management participation, general savings can 2.1.4.6 CNS/ATM and Harmonization be expected to accompany improved operational safety. Harmonization is the attainment of acom- parable level of operational performance by When considering the financial losses that utilization of compatible standards, speci- national economies bear due to outdated air fications, and ATC operational procedures. traffic control equipment, it is important for Harmonization also extends to the regulato- ATC organizations to be able to adapt quickly ry and certification process. to changing air traffic demands. Users could be disappointed with the prospect of paying Most countries have accepted the imper- higher air traffic costs, yet they are willing to ative of developing and implementing the pay higher costs for better and more efficient CNS/ATM system of the 21st century. Mak- service. Therefore, increased costs become ing this a compelling task, however, is the viable investments which, in turn, benefit rapid evolution of new classes of technol- users. From this standpoint, privatization of ogies in communications, navigation, - sur ATC services clearly profits all users. veillance, air traffic management, weather, safety, and security. The potential regional Large airlines which pay the bulk of user fees or country-specific differences in systems -ar tend to favor privatizing. However, general chitectures and acquisition approaches pose aviation groups fear that an ATC corporation obstacles to achieving harmonization. responsible for its own finances could trigger higher costs for its services. In doing so, Harmonization is sometimes a painful pro- it would be alienating an important stake- cess because of a parochial reluctance that holder in the corporatization initiative — the resists the harmonizing efforts. The major general aviation community. reasons for this are the additional workload and the insular quest of ownership. Impact of Privatization on CNS/ATM Mod- However, the benefits of harmonization of ernization Programs standards and the resulting worldwide market for suppliers are immense. The price of In coming years, the impact of privatization not achieving harmonization will, of conse- trends upon CNS/ATM modernization pro- quence, be significant. grams will be profound. Most important is the way civil aviation organizations, airports, and airlines will buy new systems for air traf- 2.1.4.7 CNS/ATM and Globalization fic control. Decisions will likely be made on Globalization represents movements of the basis of best value, lowest risk, and per- companies into multiple national and in- formance. Gone will be the days of purchas- ternational markets, directly or indirectly, ing from vendors that may not offer the best through alliances, franchises, or direct in- or most cost-effective (value-driven) techno- vestment. This trend has been present in the logical solution. air transport industry because air transport is needed to support global trade. Interna-

2 • 27 • NEXA • ATI Global Markets tional air carriers, airplane manufacturers, business that is the immediate recipient of and ATC equipment suppliers have for years the service. One of the challenges of global- operated globally and understand that inter- ization is the fact that from region to region, national market share is the key to success. and from nation to nation, this customer var- Advancing technological drivers are forcing ies. the hand of managers of these enterprises. It is becoming increasingly difficult to separate technology issues from policy and mar- 2.1.4.8 Multinational Facilities and Services ket forces. As satellite-based CNS begins to take hold throughout all ICAO regions of the world, a CNS/ATM technologies, especially in the fundamental institutional issue remains to realms of satellite CNS and automation, be dealt with regarding the ownership and are evolving rapidly and present significant control of these assets. To assist states and challenges for the clients of ATC equipment regional bodies, ICAO has developed guide- suppliers, the civil aviation agencies. Be- lines on organizational, financial, and mana- cause the acquisition of major ATM systems gerial aspects of multinational facilities and takes from five to ten or more years, auto- services. Particular effort is now being de- mation system designs need to consider how voted to expanding such guidance to specifi- evolving capabilities (such as the rapid and cally facilitate the implementation of various seemingly endless improvements in commu- components of CNS/ATM systems, and to nications and satellite navigation) can be -ex test the boundaries of joint ownership — a ploited along the way. challenge for civil aviation agencies not used to being minority owners of critical hard- Improving technological performance in a ware and services, thereby raising questions world of constant change is by no means a of sovereignty. simple task. Establishing a satellite-based ATM environment will inevitably encom- For example, Global Navigation Satellite pass changes in business practices and - or System (GNSS )capabilities and applications ganizations with responsibility for air traffic continue to grow rapidly and are expected to management and related ATC equipment. A have substantial usage by civil air transport, large percentage of personnel in CNS/ATM marine, land, and survey/mapping/geo- are the air traffic controllers, whose jobs graphic information systems (GIS) users. Po- are defined by automation. Therefore, each litical and economic factors could well lead to upgrade necessitates due consideration of a shift to civilian control and possible modi- technologies in business process definition, fications to aspects of the system.- Uncer design, and reengineering. The challenge tainty created by factors such as long-term of organizational change comes from the ownership and control of GNSS is having a modification to processes and procedures profound impact upon the ultimate adoption established through regulatory and policy of global ATM equipment and standards. A initiatives. Technology alone will not change satellite navigation system whose control the business process nor the organizations rests firmly in the hands of the governments involved with the specific practices. or militaries will slow international adoption and feed the search (and duplicative waste The continuing march toward globalization of resources) for alternative satellite assets. of the air transport industry itself requires a careful consideration of who the customer is, internally and externally. In many parts of Internationally Shared Assets — Govern- the world, ATC organizations are referred to ment or Civil Aviation Owned as services, as opposed to authorities, with Today terrestrial and satellite CNS remains the main purpose of the organization to pro- the area of the most intense activity in joint vide a necessary function in ATC. In turn, it ownership. Many countries are pooling cap- is important that the air traffic services (ATS) ital asset resources in modernization drives organization be properly oriented toward to improve the performance of air naviga- the customer, that is, the person and/or tion regions. Inter-regional programs are

2 • 28 • NEXA • ATI Global Markets also underway. Internationally shared assets Internationally Shared Assets - Airline Indus- in communications, navigation, and surveil- try Owned lance will become the hallmark of 21st cen- Airlines were aware of the cost-effectiveness tury air traffic management systems. of jointly managed air traffic systems decades The European ICAO region is an area of ex- ago. In the 1930s, US airlines began to share tremes. In certain areas, state-of-the-art ATC weather services and data. Voice communi- equipment, facilities, and services are avail- cations were next, with the introduction of able, while in others outdated infrastructure the Aeronautical Radio Service, which is now exists. More often than not, European region a global voice and data network whose as- ATC facilities compete with incompatible air sets are owned by the airline industry. These navigation systems and methodologies. initiatives are now viewed more from a business value perspective. European airlines and airline trade associations, such as IATA and the Association of It is highly unlikely that continued expansion European Airlines (AEA), are pushing Euro- in joint airline ownership of airway facilities pean governments to unite and implement will continue. In addition to national or agen- a single European system. Associations rec- cy concerns, debate also revolves around the ommend that the ATM system be formed as potential or perceived conflict of price fixing a distinct legal entity owned by participating in commonly-owned airline ticket reserva- nations, yet operated and managed accord- tion systems. ing to business rules rather than bureaucratic government rules and regulations. The 2.1.4.9 CNS/ATM and Information Technol- new system should be managed by a single ogies authority, enjoy fully compatible equipment, and operate from a common set of stan- In today’s business environment, change is dards, practices, and procedures. A single constant, and successful air transport organi- European ATM system would require the zations have developed evolutionary meth- participation of nearly 25 nations in addition ods for evaluating and improving how they to their individual civil aviation authorities go about their business. This is not yet the and multinational organizations. Coopera- case in the government side of the air trans- tion would also be required by various mil- port sector. itary ATC systems and organizations such as Leaders of government are, however, plac- the European Union, the JAA, and EURO- ing priority on finding new ways to work CONTROL, all of which have distinct member through the changes ahead. In the civil avia- nations. The effort to establish a single Eu- tion community, long dominated by national ropean ATM should begin with a wide-rang- bureaucracies, many of the traditional orga- ing R&D effort to develop an advanced ATM nizational strategies dealing with change are system to provide the ATC capacity to meet obsolete or are becoming so. In an environ- increased air carrier demands. ment of constant change, new perspectives Implementing a satellite-based CNS will like- and attitudes are essential if an organization ly lead to widespread use of the space-based is to do better than merely survive. Bureau- assets throughout the spectrum of trans- cracies are being compelled to become more portation systems. Additionally, funding and “business-like” because of the financial im- budgeting issues will become complex in an peratives of modernization and the -impor international context. ICAO may be called tance of international trade. These organi- upon to play an increasing role in the funding zations need a better understanding of the or operation of these assets. impact they have upon national competitiveness and of the positive influence modern infrastructure development brings to their national trade.

2 • 29 • NEXA • ATI Global Markets The more forward-thinking civil aviation a key differentiator for ATI suppliers and leadership is not looking for small, incremen- buyers. tal changes, but for advice on larger issues that cut to the core of their missions and how they use their infrastructure to aid national competition in the world marketplace. 2.2 Institutional Drivers and Benefits of This paradigm is sought to fundamentally Emerging CNS/ATM Systems rethink an organization’s business, identify Large investments by the world’s airlines in core competencies, and leverage the orga- new aircraft, many equipped with advanced nization’s resources. Central to this is the flight management systems, have been driv- information technology component: how en by efficiency concerns and strong growth to integrate IT planning with organizational in passenger demand. Airspace use and ca- strategy, and ultimately to measure the im- pacity have not kept pace with this increase pact of IT on operational performance. in demand and, as a result, air traffic services Traditionally, IT was applied to automate provided through modern CNS/ATM pro- manual tasks with minimal thought given cedures and systems are lacking. This com- to whether the underlying processes were pounds the already major efficiency penalty aligned with the organization’s current busi- for airlines, which cannot maximize or, in ness plan. Measures used to evaluate the some instances, recoup their investment in merits of IT (in the case of this study, CNS/ these state-of-the-art aircraft. ATM automation), must include metrics that Exacerbating the problem is the fact that clearly demonstrate a return on investment governments insist upon maintaining civil to the organization and its customers. aviation agency control and management of Most ANSPs, both public and private sector, airway facilities. By doing so, national - gov express frustration at being unable to close ernments: the gap between their investment in auto- • Overstress civil aviation oversight under mation technologies and the contribution the guise of zero tolerance of safety vio- that this investment is expected to make lations. in productivity, efficiency, and profitability. Measuring value and linking investment • Perpetuate government oversight, es- to automation is complex and disquieting. pecially in procurement processes and However, modernized CNS/ATM and ad- regulations. vanced automation of airways will be key to harnessing the power of change and radical- • Apply the same employment and union ly improving organizational performance of structures to the “safety critical” civil civil aviation agencies globally. aviation agency as may be enjoyed by all other national agencies, most of whom Key Points: are not involved in an “extended enterprise” environment. • The continued globalization of the aviation industry is revolutionizing air traffic • Restrict timely access to needed fund- policies with respect to deregulation, lib- ing for modernization, giving priority to eralization, and harmonization policies. funding needs that are politically more expedient. • These trends are pushing the industry to focus on the flexibility offered by privat- This institutional problem is slowly being ized services and the advanced skill sets examined, often under the force of crisis (fi- of multinational capabilities. nancial or otherwise), as identified in other sections. A review of the physical shortcom- • The ability to build adaption and change ings and limitations in CNS/ATM follows, and into products and services will become the underlying institutional issues are identified.

2 • 30 • NEXA • ATI Global Markets 2.2.1 Limitations of Present Communica- ited to pilot reports of position via HF/VHF tions, Navigation, and Surveillance, and voice or basic data transmissions. These lim- New Concepts itations have resulted in a wasteful use of airspace (a contradiction over most ocean Due to terrain limitations in many regions regions) and very large separation minima. of the world, it is difficult, if not impracti- cal, for current terrestrial CNS systems to New CNS systems should surmount these be used. Even with greater coverage, wider limitations and, through improved ATC sys- implementation brings with it other severe tems and procedures, allow for the expan- constraints which limit effective air traffic sion of ATM concepts on a global scale. management.

Modes of air traffic and corresponding den- 2.2.2 Limitations of Existing Air Traffic Man- sity characteristics will dictate new CNS sys- agement, and New Concepts tem evolution by mode of operation. A comprehensive assessment of the characteristics Around the world, the general objective of and capabilities of the present CNS system ATM is to enable aircraft operators to meet and of their implementation in various parts their planned times of departure and arriv- of the world reveal several shortcomings: al, and to adhere to their preferred flight profiles optimized to their equipment and • The propagation limitations of current procedures. ATM assumes that minimum line-of-sight systems for CNS include constraints are imposed and safety is not wide variations in capacity, range of op- compromised. Air traffic management is eration, accuracy, availability, and reli- considered to consist of three elements: ability. airspace management (policy), traffic flow management, and air traffic control. Pres- • Severe limitations of voice communica- ently, CNS/ATM is an evolving system and tions, the principal media for ATC and methodology which, as one looks through- ATM control, and the lack of reliable, out the world, suffers a number of shortcom- high-capacity digital air-to-ground data ings, including: interchange. • Insufficient number of terrestrial surveil- • The institutional difficulty of implement- lance systems over large regions of the ing present CNS systems and operating globe, many of which require relief from them in a consistent manner (harmoni- congestion. zation of systems and interoperability of equipment) in large parts of the world. • Air route availability constrained by terrestrial navigation aids which, due to Although their effects on air system capacity their location or density, create bottle- and efficiency vary widely, these limitations necks. are inherent to the existing systems in place in the various ICAO regions. In fact, one or • Dissimilar air traffic control procedures, more of these factors inhibit the further de- requiring modification of flight profiles. velopment of air commerce capacity and ef- • ficiencies worldwide. Dissimilar separation standards, requiring modification of flight profiles. For example, over the oceans the systems • currently approved for use are severely limit- The uncoordinated provision of present ed. Thus, air-to-ground communications can CNS equipment, resulting in the duplica- be accomplished only through HF/VHF radio tion of resources and services. and limited datalink communications, often • A lack of appropriate parallel route struc- with the need for intermediate communi- tures to relieve route congestion. cators. While on-board navigation systems incorporate GPS and are available to larger • Poor quality and incompatible communi- aircraft, long-range navigation has been lim- cations facilities.

2 • 31 • NEXA • ATI Global Markets • International language difficulties. location in relation to other aircraft, thereby enabling planes to fly more closely togeth- The new CNS systems will make improve- er with the same level of safety. NextGen’s ments in their own right, but will also form increased scope, volume, and distribution of the technological basis for a step change im- information is intended to help planes land provement in ATM. This will permit a more faster, navigate through weather better, and flexible and efficient use of airspace, both en enjoy reduced taxi times so flights and air- route and in terminal areas. This is needed ports themselves can run more efficiently to improve the accommodation of the pre- (Figure 2-9 p. 36). ferred profile in all phases of flight. In particular, airspace boundaries are to be made NextGen Elements transparent to the users. NextGen consists of many systems in a highly Key Points: interrelated (operational and information -ar chitecture) system-of-systems: • Major impediments to existing ATM include: insufficient surveillance, terres- Automatic Dependent Surveillance-Broad- trial navigation constraints, congestion cast (ADS-B). ADS-B will use GPS satellite from rigid route structures, disparate signals to provide air traffic controllers and ATC procedures, and uncoordinated pilots with much more accurate information communications. that will help keep aircraft safely separated in the sky and on runways. Aircraft transpon- • New technologies and systems must ad- ders receive GPS signals and use them to de- dress these concerns to be valuable to termine the aircraft’s precise position in the ATM providers. sky. These and other data are then broadcast to other aircraft and air traffic control. Once fully established, both pilots and air traffic 2.2.2.1 Next Generation Air Transportation controllers will, for the first time, see the System (NextGen) same real-time display of air traffic, substan- The Next Generation Air Transportation Sys- tially improving safety. The FAA will mandate tem (NextGen) is the name given to a new the avionics necessary for implementing national airspace system (NAS) due for im- ADS-B. plementation across the US in stages between 2012 and 2025. NextGen proposes to System Wide Information Management transform America’s air traffic control system (SWIM). SWIM will provide a single infra- from an aging, ground-based system to a sat- structure and information management ellite-based system. GPS technology will be system to deliver data to many users and used to shorten routes, save time and fuel, applications. By reducing the number and reduce traffic delays, increase capacity, and types of interfaces and systems, SWIM will permit controllers to monitor and manage reduce data redundancy and better facilitate aircraft with greater safety margins. Planes multi-user information sharing. SWIM will will be able to fly closer together, take more also enable new modes of decision-making direct routes, and avoid delays caused by as information is more easily accessed. airport “stacking” as planes wait for an open Next Generation Data Communications. runway. The FAA will undertake a wide-rang- Current communications between aircrew ing transformation of the entire US air trans- and air traffic control, and between air traffic portation system with the aim of reducing controllers, are largely realized through voice gridlock, both in the sky and at the airports. communications. Initially, the introduction Once implemented, NextGen will allow pilots of data communications will provide an ad- and dispatchers to select their own direct ditional means of two-way communication flight path rather than using a grid-like high- for air traffic control clearances, instructions, way system. By 2020, aircraft are expected advisories, flight crew requests, and re- to be equipped to inform pilots of their exact ports. With the majority of aircraft datalink

2 • 32 • NEXA • ATI Global Markets equipped, the exchange of routine control- by 2018, NextGen will reduce aviation fuel ler-pilot messages and clearances via data- consumption by 1.4 billion gallons, reduce link will enable controllers to handle more emissions by 14 million tons, and save $23 traffic. This will improve air traffic controller billion in costs. Each mile in the air costs an productivity, enhancing capacity and safety. airline about $0.10-$0.15 per seat in operating expenses like flight crew and fuel. Flying Next Generation Network Enabled Weather directly from one airport to the next and (NNEW). Every year, 70 percent of NAS delays reducing congestion around airports can re- are attributed to weather. The goal of NNEW duce the time and miles spent in the air for is to cut weather-related delays at least in the same trip. half. Tens of thousands of global weather ob- servations and sensor reports from ground, According to the FAA, the implementation airborne and space-based sources will fuse of a surface management initiative in Bos- into a single national weather information ton saved 5,100 gallons of aviation fuel and system, updated in real time. NNEW will pro- reduced carbon dioxide emissions by 50 vide a common weather picture across the tons during a period of heavy congestion. national airspace system, and enable better A shared surface surveillance system com- air transportation decision making. bined with aircraft metering techniques reduced taxi-out time by 7,000 hours a year NAS Voice Switch (NVS). There are currently at New York’s JFK airport and 5,000 hours a seventeen different voice switching systems year in Memphis. Helicopters flying over the in the NAS, some in use for more than twen- Gulf of Mexico are also using NextGen tech- ty years. NVS will replace these systems with nology to manage poor weather conditions a single air-to-ground and ground-to-ground and in Colorado to navigate through danger- voice communications system. ous mountain terrain.

Implementation There has also been a demonstration in Memphis with Delta Airlines and FedEx. The The FAA is pursuing a NextGen implementa- National Air Traffic Controllers Association tion plan and has established a NextGen Ad- (NATCA) conducted a demonstration at Dal- visory Committee to aid in that implementa- las/Fort Worth International Airport (DFW) tion. In 2009, the advisory committee began of a new surveillance display called the collaboration with the Radio Technical Com- Tower Flight Data Manager (TFDM) system mission for Aeronautics (RTCA) Task Force, that would present surveillance, flight data, a joint government and industry group, to weather, airport configuration, and other participate in the effort. Besides the FAA, the information critical to controllers. Special- RTCA Task Force membership includes the ized optimized profile descents, also known Air Line Pilots Association, the Air Transport as initial tailored arrivals, have moved from Association of America, Aircraft Owners and the demonstration phase to operational use Pilots Association, The Boeing Company, the at airports in San Francisco, Los Angeles and US Department of Defense, Garmin Inter- Miami. national, Honeywell International, Rockwell International, Stanford University, Lockheed In June 2010, European and American au- Martin, MIT Lincoln Laboratory, Harris- Cor thorities reached a preliminary agreement poration, NASA, National Business Aviation on interoperability between their future Association, and Raytheon. air traffic management systems, SESAR and NextGen. In March 2011, the FAA released Benefits the latest version of its implementation plan. As of July 2011, JetBlue and Southwest Air- The FAA estimates that increasing conges- lines had installed onboard equipment, part- tion in the air transportation system of the ly with federal funds. US, if unaddressed, would cost the American economy $22 billion annually in lost economic activity by 2022. It also estimates that

2 • 33 • NEXA • ATI Global Markets Challenges sult of this decision is not yet known, but it could delay certain SWIM capabilities as well Critics state that the FAA faces considerable as hinder the progress of other capabilities challenges in implementing a satellite-based that depend, in turn, on the system integra- NextGen ATC system, ranging from delays in tion that SWIM is intended to provide. Con- approving new procedures and technology sequently, the mid-term (through 2018) and to skepticism among airlines regarding in- long-term (beyond 2018) implementation of vestment in new equipment. NextGen will be affected by how well FAA Airline skepticism: Airlines must invest in eq- manages program interdependencies. uipage in order for NextGen to work. Howev- Potential budget reductions: The delays er, airlines’ greatest fear is not that benefits in program implementation and budget will not materialize, but rather that FAA may constraints have also affected FAA capital not produce promised NextGen capabilities budget planning. Congress has proposed on time. Airlines want performance guaran- reducing the FAA’s capital budget by a total tees in order to begin equipping their fleets $2.8 billion (20 percent) for fiscal years 2012 with expensive NextGen avionics. through 2016 largely due to government Costs: Ongoing problems continue to threat- budget constraints. Most of this proposed en NextGen’s costs and timeline. A report re- reduction will fall upon NextGen and Next- leased in October 2011 by the Government Gen-related spending, as reflected in FAA’s Accounting Office (GAO) found the FAA has revised five-year Capital Investment Plan for made some progress in implementation, but fiscal years 2012 through 2016. The FAA will delays threaten to impact costs and benefits. have to balance its priorities to ensure that Specifically, some acquisitions have been de- NextGen implementation stays on course layed, which has impacted the timelines of while also sustaining the current infrastruc- other dependent systems. The report also ture needed to prevent failures and maintain indicates that some key acquisitions may the reliability and efficiency of current oper- soon encounter delays, which can increase ations. overall acquisition costs as well as costs to Effect of delays on the FAA’s ability to col- maintain current systems. For example, de- laborate with Europe: Delays to NextGen lays in implementing the En route Automa- programs and potential reductions in the tion Modernization (ERAM) program, critical budget for NextGen activities could delay the to NextGen, is projected to increase costs by schedule for harmonization with Europe’s air $330 million, as well as an estimated $7 to traffic management modernization efforts $10 million per month in additional costs to and the realization of these benefits. continue maintaining the system that ERAM was meant to replace. Environment

NextGen program interdependencies: Due Another issue in implementing NextGen is to the integrated nature of NextGen, many expediting environmental reviews and devel- of its component systems are mutually de- oping strategies to address its environmental pendent on one or more other systems. For impacts. A previous GAO report on environ- instance, the delivery of ADS-B depends on mental impacts at airports indicated that ERAM because ADS-B requires the use of due to the changes in aircraft flight paths as some ERAM functions. Additionally, ERAM is a result of NextGen, some communities that instrumental to the on-time implementation were previously unaffected or minimally af- of two other crucial NextGen acquisitions— fected by aircraft noise would be exposed data communications and SWIM. The FAA to increased noise levels. These levels could pushed the data communications program’s trigger the need for environmental reviews, start date from September 2011 to Febru- as well as raise community concerns. The ary 2012 and delayed the SWIM segment 2 report found that addressing environmen- start date from 2010 to December 2012 in tal impacts can delay the implementation part due to ERAM’s delay. The long-term re- of operational changes and indicated that a

2 • 34 • NEXA • ATI Global Markets systematic approach to addressing these im- to be shared equally among the European pacts and the resulting community concerns Community, EUROCONTROL, and the indus- may help reduce such delays. It is worth not- try, each receiving €700 million ($858 mil- ing that the FAA is working on developing lion). (Figure 2-10) environmental review processes that affect NextGen activities. EC Decision In March 2009, the Council of the European 2.2.2.2 SESAR Joint Undertaking. Union officially endorsed SESAR’s Europe- an air traffic management master plan. The The SESAR Joint Undertaking (JU) is the Eu- ATM master plan provides the road-map for ropean public-private partnership managing the development and deployment phases the development phase of the Single Euro- of the SESAR program which constitutes the pean Sky ATM Research (SESAR) program technological pillar of the Single European that will give Europe a high-performance Sky policy. SESAR aims at developing the new ATM infrastructure resulting in the safe and generation air traffic management system environmentally friendly development of air capable of ensuring safety and efficiency of transport. The objectives of this program air transport throughout Europe over the are, by 2020, to save per flight operation: next 30 years. • 8 to 14 minutes. SESAR Membership and Funding • 300 to 500 kg of fuel. The SESAR definition phase was co-funded • 948 to 1575 kg of CO2. by the European Union and EUROCONTROL. It was carried out by the SESAR consortium SESAR Phases established through a contractual agree- SESAR’s goal is to develop the new genera- ment joining forces and expertise from all tion air traffic management system capa- relevant ATM stakeholders. The SESAR con- ble of ensuring the safety and fluidity of air sortium represented a unique initiative, transport worldwide over the next 30 years. bringing together European expertise in the field of ATM. The first phase (the definition phase) delivered the ATM master plan that defines the The SESAR Joint Undertaking was created content, the development, and deployment under European Union law in February 2007, plans of the next generation of ATM systems with EUROCONTROL and the European Com- (2009). mission as founding members. In addition, 15 organizations have signed a membership The development phase (2008-2013) will agreement with the SESAR JU. The program produce the required new generation of can profit from the expertise of airport op- technological systems, components, and operators, ANSPs, the ground and aerospace erational procedures as defined in the SESAR manufacturing industry, aircraft manufactur- ATM master plan and work program. ers, and airborne equipment manufacturers. With the endorsement of 13 associate partners in July 2010, the SESAR JU included ad- The deployment phase (2014-2020) will see ditional companies with very different pro- the large-scale production and implementa- files and expertise from around the world in tion of the new air traffic management in- the SESAR work program (Figure 2-11). frastructure, composed of fully harmonized and interoperable components guaranteeing high performance air transport activities in Europe.

The total estimated cost of SESAR’s development phase is €2.1 billion ($2.57 billion),

2 • 35 • NEXA • ATI Global Markets Figure 2-9 NextGen

SURFACE TRAFFIC MANAGEMENT Automation optimizes taxi routing. Provides controllers and pilots all equipped aircraft and vehicle positions on airport. Real-time surface tra c picture visible to airlines, controllers and equipped operators. Surface movement EFFICIENT CRUISE management linked to departure and arrival sequencing. RNAV, RNP and RVSM utilize reduced separation ADS-B and ASDE-X contribute to this function. Taxi times requirements increasing airspace capacity. Aircraft y reduced and safety enhanced. most optimal path using trajectory-based operations ENHANCED SURFACE TRAFFIC MANAGEMENT considering wind, destination, weather and tra c. INTEGRATED FLIGHT PLANNING Re-routes determined with weather fused into Runway exit point, assigned gate and taxi decision-making tools are tailored to each aircraft. route sent by Data Communications to Operators and tra c managers Data Communications reduce frequency pilots prior to approach. Pilot and controller have immediate access to congestion and errors. ADS-B supported routes workload reduced and safety improved. identical weather information STREAMLINED DEPARTURE MANAGEMENT available for equipped aircraft. through one data source. RNAV and RNP precision allow multiple departure STREAMLINED ARRIVAL MANAGEMENT paths from each runway. ENHANCED SURFACE TRAFFIC OPERATIONS Departure capacity increased. Arrival sequence planned hundreds of miles in advance. RNAV and RNP allow multiple precision Pilots and controllers talk less by radio. Data paths to runway. Equipped aircraft y precise Communications expedite clearances, horizontal and vertical paths at reduced power reduce communication errors. Pilot and from descent point to nal approach in almost all controller workloads reduced. types of weather. Time and fuel are saved. Emissions and holding are reduced.

DOMESTIC/OCEANIC CRUISE DE SC TAKEOFF EN / T FLIGHT PLANNING PUSH BACK / TAXI / FINAL APPROACH / LANDING

PHASES OF FLIGHT Mid-Term 2018 v03-2010

Source: FAA

Figure 2-10 SESAR Joint Undertaking

Source: SESAR Joint Undertaking

2 • 36 • NEXA • ATI Global Markets Figure 2-11 as the SESAR concept of operation. Key fea- SESAR JU Partners tures include: Founding Associates Organizations • Moving from airspace to trajecto- Aena Avtech ry-based operations, so that each- air Airbus Belgocontrol craft achieves its preferred route and Alenia Aermacchi Boeing arrival time. Deutsche Flugsicherung Luchtverkeersleiding (DFS) Nederland (LVNL) • Collaborative planning so that all parties Direction des services de Lockheed Martin involved in flight management from de- la navigation aérienne NATS Services (DSNA) NAV Portugal parture gate to arrival gate can plan their Ente Nazionale per l’As- Moroccan Airports activities based on the performance the sistenza al Volo (ENAV) Authority system will deliver. EUROCONTROL PANSA European Commission Società Esercizi Aero- • Dynamic airspace management through Frequentis portuali (SEA) enhanced coordination between civil Honeywell Skyguide Indra Sistemas Thales Australia and military authorities. NATMIG Thales Raytheon Sys- NATS Holdings tems • New technologies providing more accu- NORACON rate airborne navigation and optimized SEAC spacing between aircraft to maximize SELEX Sistemi Integrati Thales Group airspace and airport capacity. New technologies will be embedded into a har- Source: SESAR Joint Undertaking monized and interoperable technical architecture while supporting the needs of Single European Sky all European regions. The Single European Sky (SES) is a European Commission initiative by which the design, • Central role for the human, widely sup- management, and regulation of airspace will ported by advanced tools to work safely be coordinated throughout the European and without undue pressure. Union (ECAA area). SES is expected to benefit all airspace users by ensuring the safe and ef- SESAR Performance Goals ficient utilization of airspace and the air traffic management system within and beyond In 2005, the Commission stated the political the EU. Airspace management is planned to vision and high level goals for the SES and its move away from the previous domination by technological pillar: national boundaries to the use of “functional • Enable a three-fold increase in capacity airspace blocks,” the boundaries of which will to reduce delays, both on the ground be designed to maximize airspace efficiency. and in the air. Within the airspace, air traffic management, while continuing to have safety as its primary • Improve the safety performance by a objective, will also be driven by the require- factor of ten. ments of the airspace user and the need to provide for increasing air traffic. The aim is • Enable a ten percent reduction in the to use air traffic management more closely effects flights have on the environment. based on desired flight patterns, leading to greater safety, efficiency, and capacity. • Provide ATM services to airspace users at a cost of at least 50 percent less. SESAR ATM Concepts The definition phase of SESAR has conclud- SESAR contributions to the overall SES ob- ed that ATM can significantly contribute to jectives will come as the result of a new reaching these goals. SESAR is now targeting approach to air traffic management known for 2020:

2 • 37 • NEXA • ATI Global Markets Figure 2-12 SESAR Key Achievements

Source: SESAR

• A 73 percent increase in capacity from sult of ATM improvements alone, there- 2004. by enabling a ten percent reduction of gas emissions per flight. • Associated improvement in safety so that the total number of ATM-induced • To improve the management of noise accidents and serious or risk-bearing in- emissions and their impacts. To ensure cidents will not increase despite traffic that these are minimized for each flight growth. to the greatest extent possible.

• A ten percent reduction per flight in en- Should the development phase conclude vironmental impact compared to 2005. that ATM improvements on their own cannot fulfill the above objectives, the adequate co- • A 50 percent reduction in cost per flight ordination between SESAR and Clean Sky10 compared to 2004. would allow for the necessary trade-offs between the two initiatives, ensuring that, With two major objectives in the environ- summing up their respective contributions, mental fields, the SESAR program reflects the environmental objectives would remain the increase of environmental pressure and within reach. Any evolution in respect to the its importance within the ATM community. expected SESAR contribution to reducing en- These objectives are: vironmental impact of air transport shall be • To achieve emission improvements. reflected in future versions of the ATM mas- The SESAR target for 2020 is to achieve ter plan. ten percent fuel savings per flight as a re-

2 • 38 • NEXA • ATI Global Markets SESAR Master Plan Schedule aration will be implemented (2D-PTC), and ASAS spacing applications will be Figure 2-12 presents the SESAR ATM service introduced in terminal areas. Advanced levels and schedule of operational improve- environmentally-friendly operations will ments (key dates). be used in higher density terminal ar- • Service level 0: Consists of rolling out eas, with the introduction of 3D trajec- current best practices and deploying tory management and new controller available technologies aimed at provid- tools. Surface movement operations will ing the processes and system support benefit from increased automation and for efficient collaborative planning and improved surface navigation. Positional timely decision-making across the- net awareness will be improved through vi- work. The on-going initiatives support sual enhancement technologies. the delivery of service level 0, ensuring • Service level 3: The use of free routing is that the improvements can be imple- extended, and a new model of airspace mented in a short timeframe, provided categories will be introduced to pave the that the required level of stakeholder way to the two target categories con- involvement is secured. Initiatives such templated in the SESAR concept of oper- as DMEAN, LINK 2000+, etc., are high- ations. This is complemented by airspace lighted. organizations’ measures for an extensive • Service level 1: Aims to achieve the re- dynamic management of en route and quired interoperability between ATM terminal airspace. ATC automation will partners to enable smooth migration to benefit from full use of a 4D shared tra- trajectory-based operations, taking ini- jectory environment, thus making pos- tial benefit of the “manual” user-driven sible the implementation of a full set of prioritization process (UDPP). The route advanced controller tools, as well as fur- network will be increasingly flexible to ther assistance to the controllers in sup- offer more options to airspace users. port of precision trajectory operations More advanced procedures and systems and effective queue management. First will be introduced to increase safety and ASAS separation applications will be in- throughput of airports/sectors to the troduced. Flight deck automation will be performance targets for the period. This increasingly used on the airport surface. will build upon conventional modes of • Service level 4: Contributes to the tran- separation while paving the way for new sition to the ATM target concept with methods of control. Service level 1 im- full implementation of enhanced trajec- provements will be carried out in com- tory management through 3D precision pliance with the need for environmental clearances for user-preferred trajecto- protection. ries and of ASAS cooperative separation • Service level 2: Introduces the fundamen- applications. For airports, remote tower tal changes underpinning the SESAR con- operations are introduced, and specif- cept of operations thanks to the progres- ic procedures based on synthetic vision sive implementation of a rich, informa systems are defined. tion-sharing environment, with SWIM • Service level 5: The main features will supporting the shared business trajecto- be the implementation of 4D precision ry. More and more user-preferred trajec- trajectory clearances and the introduc- tories will be accommodated along with tion of ASAS self-separation in a mixed functional airspace block (FAB) imple- mode environment. These changes re- mentation over Europe, enabling more quire extensive feasibility studies and direct routes in upper airspace. The UDPP will be completed as result of innovative will be applied defining prioritization as research and as part of the master plan the result of a collaborative process in- maintenance process. volving all partners. New modes of sep-

2 • 39 • NEXA • ATI Global Markets SWIM and SESAR • Increase ATC capacity

SWIM has been recognized as an essential • Improve user convenience enabler of ATM applications within SESAR, the principles of which are also applied in, • Ensure efficient operation and supplied by, other industries. Technolo- gies enabling SWIM capabilities required by • Enhance ATM service efficiency ATM are available. SWIM as a methodology of sharing information can apply to all ATM • Respond to environmental issues capability and service levels. In this context, • Strengthen international cooperation “SWIM capability level” relates in some cases to an extension of geographical/spatial avail- As air traffic volume has increased, the num- ability, although different ATM service levels ber of flow control procedures and delays may equally need more advanced and/or have gradually risen, making it difficult to widespread implementation of SWIM. maintain service levels.

SWIM is an enabler of end-user applications CARATS is similar in concept to NextGen needed in ATM and is not in itself an ATM and SESAR, featuring a long-term vision end-user application. The concept of SWIM for introducing a range of new technolo- will make information more commonly avail- gies and procedures. The plan extends to able and consequently allow its usage by 2025 and includes major initiatives in the end-user applications. This prevents the con- areas of trajectory-based operations, per- straint of otherwise necessary full deploy- formance-based navigation, and multilater- ment of airborne and ground capabilities, ation. In fact, with a strong commitment to thus providing benefits at an earlier stage. multilateration, MLAT, and extensive radar coverage, Japan is reticent to commit large SWIM creates the conditions for advanced amounts of resources to the otherwise pop- end-user applications based on extensive ular ADS-B modernization movement. information sharing and the capability of finding the most appropriate source of in- While the full funding requirement for the formation. For the deployment of SWIM, program is still under analysis, it is difficult an approach has been selected ensuring to envision a full rollout, especially with gov- that benefits start to accrue at the earliest ernment resources focused on recovering possible time: this is achieved by migrating from the devastating earthquake and tsuna- simpler end-user applications first. The de- mi of 2012. ployment of SWIM is not dependent on the deployment of ATM changes. SWIM benefits are available even in a largely legacy environ- 2.2.2.4 Other Regional and National Initia- ment. tives This section presents mainstream concepts 2.2.2.3 CARATS for CNS/ATM that align with US and Europe- Asia is currently experiencing extensive inter- an initiatives. national economic and social change. Asian states are enjoying rapid economic growth, Communications and globalization is forcing the region to ex- New concepts for CNS provide for flexibility, plore ways of coping with increased air traf- a vital consideration when one recognizes fic capacity constraints. Japan is attempting the importance that each country attaches to confront this challenge via its Collabora- to maintaining sovereignty over its airspace. tive Action for Renovation of Air Traffic Sys- These provide considerable flexibility, for ex- tems (CARATS) program. The stated goals of ample: CARATS are to: • Each country has the choice of imple- • Enhance safety menting specific system elements to

2 • 40 • NEXA • ATI Global Markets meet its individual requirement for The concept of RNP is that for each airspace forming a complete CNS/ATM system. area (en route, terminal, etc.) a navigation capability will be specified for aircraft oper- • Countries with busy airspace would use ating in that area. Preferential treatment will more than one communications system, be given to aircraft with higher capabilities. while smaller countries with ATC prior- The current VHF omni-directional range sys- ities could adequately accommodate tem/distance measuring equipment (VOR/ their traffic requirements through VHF DME) and non-directional beacons (NDBs) datalink. will be phased out over a modest period of time. Communication with aircraft over many -ar eas of the world will (of necessity) be accom- For precision approach and landing, instru- plished through direct satellite-to-aircraft ment landing system (ILS) and GPS through links. Increased capacity for voice and data differential techniques are now the subject communications will be required but is eas- of a debate which will be given a thorough ily achievable with today’s technologies. A review in the next ten years. The most like- mix of satellite and terrestrial systems could ly outcome will be that ILS will remain the accommodate the vast range of density re- world standard during that time. Multi-mode quirements and may include provision of receivers incorporating multiple sources of VHF voice and datalink, Mode S, etc. navigation signals, including INS, will continue. WAAS and EGNOS are now operational. New air-to-ground datalink digital communications will be provided by satellites for oce- Surveillance anic and domestic en route airspace and by Mode S secondary surveillance for high den- ADS-B will be the international civil system of sity terminal areas. Voice communications surveillance, initially in en route airspace but via satellite will be provided in all areas of eventually in oceanic airspace. It will supple- airspace, eventually to include polar regions. ment secondary surveillance radar in high VHF radio communications would remain in traffic density land areas, both en route and use in domestic en route and terminal areas. in terminal airspace. Secondary surveillance radar with modes A, C, and S will be phased Navigation out as the standard surveillance system in high traffic density en route and terminal In the near future, navigation will be provid- area airspace. Primary en route surveillance ed by some form of GNSS, comprising GPS, radar is expected to be phased out or used Galileo, or GLONASS, for use in oceanic, do- by nations for only national defense purpos- mestic en route, and terminal area airspace, es. with much higher standards in accuracy and integrity than current terrestrial navigation Both SSR Mode S and ADS-B will provide capabilities. The WAAS/EGNOS concepts im- expanded surveillance information to the plemented in the US and Europe will form ground air traffic management operator. the basis for improved integrity and continu- In addition to aircraft position, altitude, ity. and ID number, the new ADS-B system will provide heading, intended path (e.g., next There will not be a single international stan- waypoints), and wind speed/temperature. dard for aircraft navigation. Rather, are- Development of airborne surveillance sys- quired navigation performance (RNP) classi- tems for collision avoidance using ADS-B as fication system will be introduced which will a back-up to ATC will continue. This would allow users (aircraft owners) and providers include both traffic collision avoidance sys- (civil aviation and air traffic controllers) some tems (TCASs) and new trajectory-based sys- degree of flexibility in procuring various nav- tems as they evolve. igation systems with different levels of capability.

2 • 41 • NEXA • ATI Global Markets Automation grams, other regional efforts are well Today automation represents the efforts of underway. civil aviation agencies to lessen the workload • Most of these efforts are concentrated in of air traffic controllers in congested airspace. the core CNS sectors, as well as aircraft However, automation is difficult to quantify avionics, which is expected since harmo- as a field or discipline. In Europe, the chal- nization standards dictate a requirement lenge includes the integration of multiple ATC systems across both geographic distanc- for interoperability. es and language barriers. The US now has harmonization accomplished; however, the 2.2.3 Benefits of ATI Modernization to sheer task of automating the world’s largest Stakeholders ATC system is compelling. In many countries where only one or two international or do- The benefits of ATI modernization are many mestic airports are in need of controlled air- when considering the stakeholders involved space, automation often can be completely in this industry. Because the management of accomplished within the controller’s airport civil aviation can be considered an “extend- terminal buildings and facilities. ed enterprise,” all the stakeholders in this econometric sphere benefit. More direct Establishing a satellite-based ATM environ- routing and greater cost and time savings, if ment will inevitably encompass changes in passed onto the airline passenger, will have air traffic control procedures. Organizations an across-the-board benefit. The expected with responsibility for air traffic manage- impact of new or more efficient services will ment and related ATC equipment are im- be seen in visitor expenditures, airline ex- pacted. A large percentage of personnel in penditures, and induced downstream eco- CNS/ATM are air traffic controllers, and any nomic impact. introduction or upgrading of automation redefines the functions of this workforce. Seamless ATC airspace management will in- Opportunities offered by automation will be crease global system capacity and allow for both threatening and attractive to the con- greater, safer, and more efficient airline flow. troller workforce. Broad categories of benefits exist and mani- fest themselves in a myriad of ways, and include: Avionics Realizing the full benefits of satellite CNS and • Improved flight safety automation will require aircraft cockpits to become more fully instrumented to take ad- • Cost savings and efficiencies vantage of automation for surveillance, com- • Responsiveness to needs munications, collision avoidance, weather reporting, and navigation. Approximately • Economic and trade benefits 17,000 commercial aircraft will need new avionics with ADS-B type datalinks integrated • Enhanced national security with GPS and satellite datalink within seven to ten years. The oceanic use of GPS is where The ultimate customer for improved ATC the biggest change will first occur. New sys- services and systems is this extended enter- tems such as Iridium’s Aireon will make use prise, and below the benefits are summa- of standard ADS-B equipment, albeit with an rized by sector. upper surface antenna, providing significant efficiencies over the oceans. 2.2.3.1 Business and Tourism Passengers Key Points: A modernized CNS/ATM will touch upon the • While NextGen and SESAR are the best- airlines, the pilots who fly the transport air- known examples of modernization pro- craft, airport operations/operators, and the civil authorities who control flight. The passenger will see a broad range of improve- 2 • 42 • NEXA • ATI Global Markets ments in services and at reduced cost. These • Reduced in-air delays. Users, including include: civil and military aircraft operators, - ex perience delays in scheduled flights or • Lower airfare costs. Lower fares are are constrained to less than optimal or driven in part by airlines whose effi- efficient aircraft operations. For large air ciency improvements have been passed carriers, small inefficiencies can lead to through. Benefits will accrue mostly in substantial cost penalties in fuel or labor. markets where continuing airline com- For example, United Airlines reported petition places pressures on pricing. As that a ten-minute savings per aircraft on modernization takes hold, reduced user its Pacific routes can save three percent fees to the airlines will also be passed of operating costs, amounting to some through. Finally, airports will operate $75 million per year in cost savings. with more efficiency, providing additional possibilities for cost savings to be • Reduced fuel reserves. Air carriers can passed through. only justify the investment required to install upgraded CNS when the benefits • Reduced travel time. This will be ev- are greater than the costs, and the civil idenced through advanced ATM con- aviation agencies cannot justify the fa- cepts such as reduced separation (more cilities and equipment programs unless airspace and airport capacity). On long a sufficient number of operators are distance flights over congested airways, equipped. One possible solution is to time savings in the air will be of direct reduce the operators’ regulatory fuel re- and obvious benefit to the passenger. serve requirements through innovative (Airport capacity constraints will become use of CNS capabilities. Incentives for the real bottleneck of the 21st century.) cutover will need to be implemented to entice most or all airspace users to invest • Improved on-time performance. This is in necessary equipment. For example, a direct benefit of improved ATM once the US and certain EU countries might the full benefits of satellite CNS and au- reduce fuel reserve requirements for in- tomation take hold. ternational flights as a way of inducing • Enhanced safety. This will be a byprod- carriers to install satellite-based naviga- uct of reduced pilot workload, less time tion equipment and to encourage satel- in the air, and streamlined air traffic con- lite-based ATC programs. trol services. • Fuel savings would arise from smaller reserve requirements. The current ocean- 2.2.3.2 Commercial Airlines ic reserve requirement is ten percent of planned en route fuel burn. A 50 percent The economic benefits of improved CNS/ reduction in fuel reserves would amount ATM will be profound for commercial air- to a savings of 8,000 pounds on a 747 lines. The principal elements of this are: on an eight-hour flight. This capability, • Reduced flying times. Aircraft will be coupled with timely upper air forecasts, able to fly the shortest routes at the can be used to justify major reductions most fuel-efficient altitudes, resulting in in international fuel reserves. Savings of reduced flying times and fuel consump- this magnitude can quickly pay for CNS tion. In the future, standardization and avionics equipment. It is also possible to the increased use of space-based CNS reduce the reserves for domestic opera- systems will result in lower equipment tions due to satellite-based capacity en- and training costs because airlines will hancements, lower landing minima, and carry fewer types of avionics on-board. improved upper air wind and weather Savings will also be earned through flex- forecasts. ible dynamic routing and even reduced • Airport access. Satellite CNS will permit communications costs. aircraft equipped with modern avionics

2 • 43 • NEXA • ATI Global Markets to fly into airfields that today, due to in- become more technologically astute strumented approach limitations (lack of and, therefore, will be more capable of equipment), are inaccessible. New mar- being employed in other industries. kets can thus be served. Despite the benefits to ATCOs, however, this group perceives automation, whether 2.2.3.3 Commercial/Professional Pilots for en route or terminal operation (includ- Pilots, in their desire to ensure the safety ing ground traffic control) not so much as of passengers and the aircraft they fly, will a threat to job security but as a means by benefit from many aspects of a modernized which individual controller performance can CNS/ATM, including: be gauged. Thus, support for automation is not strong. • Increased safety. With modernized CNS/ ATM, the pilot will be able to avoid colli- 2.2.3.5 ANSPs sions through better and less ambiguous traffic management and automation sys- For civil aviation organizations that run the tems. CNS/ATM, growth in aircraft movements over time relates directly to required in- • Timely flight information. For exam- creases in the capacity of the ATC system to ple, improved weather information and safely handle additional operations. Benefits its real-time accessibility through high include: speed datalinks will be provided. • ATC equipment acquisition cost reduc- • Simplified procedures. Flying in new- tions. Satellite CNS-based systems com- er modes of operation will be possible, plete with automation capabilities and with more simplified cockpit procedures features will cost some 50 percent less and less pilot workload. to acquire than traditional ground-based navigation and surveillance systems.

2.2.3.4 Air Traffic Controllers and ATS- Per • ATC system operations and mainte- sonnel nance (O&M) cost reduction. This is This stakeholder group has a profound im- where large savings can be utilized to pact upon the air transport industry and, justify CNS/ATM modernization. These to an extent, holds the industry hostage to savings can also result in reduced costs improved efficiencies and safety. Benefits to to air carriers and the passengers they this group include: serve. O&M cost savings could amount to ten to 30 percent per year as facilities • Simplified procedures. Controller work- are simplified, procedures are stream- load will be reduced as automation takes lined, and the work force is downsized hold and as terminal area procedures accordingly. (air and ground) are modified to take full advantage of satellite CNS capabilities, • Reduced risk of system development. especially in low visibility conditions. Sensor fusion and automation become simplified with satellite CNS; thus the • Enhanced safety of passengers. As with risk of system development failure, such airline pilots, a modernized CNS/ATM as that demonstrated with the FAA’s will facilitate the controller’s ability to Advanced Automation System (AAS), predict, and therefore to avoid, colli- can be minimized. Benefiting from pro- sions through better and less ambiguous gressive technologies developed in the traffic management and automation sys- US and in Western Europe, most other tems. Western countries and emerging nations are modernizing with comparable • More rigorous training, with greater system performances to those of major cross-industry benefits. Controllers will countries, but at a lower cost and tech-

2 • 44 • NEXA • ATI Global Markets nical risk of failure. It is not uncommon studies have pointed to the fact that airway for a turnkey system of sensors, commu- facilities (e.g. VOR, VHF ground communica- nications and automation equipment to tions) would need to be maintained at a cost be fully commissioned in less than three of some $80 million annually just to satisfy years from the date of contract award. the GA user community. The FAA may be better served to legislate tax breaks for, and then mandate, upgrades using this FAA-de- 2.2.3.6 General Aviation (GA) veloped equipment. This program concept The general aviation community both wel- faces stiff opposition from avionics manufac- comes and fears the impact of new CNS/ATM turers as well as the general aviation com- procedures and equipment costs. Aspects of munity and may take years to overcome. CNS/ATM modernization will take some time to be experienced for the general aviation 2.2.3.7 Military Operations pilot, however. The diverse aspects of military flight oper- • Safety benefits. General aviation will ations in the modernized ATM order will perhaps enjoy the higher levels of safe- require that civil and military facilities be ty that new CNS/ATM technologies (and equipped and staffed to provide compatible their related operating procedures) will service. In many developed countries, civil bring. Over the near term, a serious op- authorities control military flight operations erator can benefit from some of the latin peacetime. Elsewhere, developing coun- est navigation or communications gear. tries manage airspace and air traffic services The GA community has been concerned through military ATC facilities staffed by air about the proliferation of various navi- force controllers. As found in the US and in gation and landing aids in recent years. Europe, responsibility is often shared. GPS offers “the best buy” in terms of required on-board equipment, as well as An important consideration of a modernized minimal ground station requirements. CNS/ATM is that special military needs are Flight safety will improve. fully accommodated by the airspace system, and thus the military’s special use airspace • Cost savings. With general aviation and procedures need to be compatible with trending more toward all-weather flight the civil component. In many countries, air- and instrument flight rules (IFR) condi- space is being redesigned to accommodate tions, technologies such as GPS, WAAS, the so-called “dual-use” imperatives. Most and related navigation or communica- nations’ military and commercial interests tions equipment will be affordable. At a are best served by making optimum use of 1993 landing systems conference held in shared infrastructure, a more cost-effective Geneva, the International Council of Air- means than dedicated facilities. Airspace is craft Owner and Pilot Associations (ICA- an important element of any country’s eco- OPA) stated that “because of the cost nomic and trade advantage and needs to be of multiple systems a direct transition tailored for maximum commercial advan- from ILS to GPS, bypassing MLS, would tage, without compromising national secu- be general aviation’s favored course of rity. action.” Additionally, fuel savings will be significantly reduced. In general terms, the military will derive benefits both directly and indirectly from a mod- In the US today, the FAA is exploring the pos- ernized CNS/ATM structure, whose tech- sibility of supporting the development of a nologies and procedures utilize advanced multi-mode navigation and flight advisory technologies and automation systems. For system comprising RAIM-based (receive au- example: tonomous integrity monitoring) GPS, WAAS, or DGPS, inertial sensors (for navigation-out), • Safety and efficiency of flight. Direct- cockpit flight recorder, and airway database ly, the military fleets will benefit from to provide waypoint information. Economic better, safer, and more efficient flight

2 • 45 • NEXA • ATI Global Markets operations (similar to the benefits to be 2.2.3.8 Airport Authorities and Owners enjoyed by commercial carriers). Many Airlines and airports constantly work to in- air forces will be capable of using com- crease capacity, and the recent trend in ca- mercial avionics equipment, perhaps pacity expansion continues to underline the augmented with secure HF or VHF voice emergence of a more robust and competi- and data communications. tive industry. Major problems are looming • Dynamic airspace allocation. Automa- on the horizon, however. tion can handle complex and time-vary- Besides the obvious fact that modernized ing airspace allocation procedures and CNS/ATM comprising satellite CNS provides may dynamically allocate special use air- the capability to navigate between any two space while at all times segregating mil- points on the globe using a common system, itary and commercial aircraft as needed one of the greatest economic potentials will to ensure safety. occur in the form of differential GPS at the • Increased national security. Indirectly, a local level. The implications are compelling if modernized CNS/ATM utilizing satellite one stops to consider the economic benefits CNS, ATM, automation, and advanced that nations can achieve if most of their air- air traffic procedures will contribute to ports and landing fields are capable of sup- the monitoring of a nation’s borders and porting Category I/II/III aviation operations. flight corridors, helping to make air sov- Consider the following benefits: ereignty more assured, and increasing • Better utilization of existing capacity. the ability of civil aviation authorities Large airport development projects are to conduct regional operations through very costly, primarily due to land acqui- harmonized equipment and procedures. sition and development issues. ICAO The interwoven military and civil air traffic estimates that within the next 15 years systems found in many countries have com- over $350 billion will have to be spent pelling integration problems. In US airspace on new airport construction worldwide and its territories, for example, the US De- to meet future air traffic growth require- partment of Defense (DOD) operates over ments. It takes an average of ten years 24,000 fixed-wing and helicopter aircraft and to plan, design, and build additional run- handles over two million civil aircraft opera- ways at large airport facilities because of tions per year and 20 million military aircraft land costs, political concerns, and envi- operations. A variety of military operations ronmental issues. Space for additional designed to meet training, aerial refueling, runways may not even be available in and test and evaluation goals require special most cases, which leads to an even more use airspace. These airspace requirements costly proposition: the development of necessitate close coordination between the offshore airports. FAA and military organizations to optimize • Aircraft mix. Additionally, the variable airspace use by civil and military users. The mix of aircraft operations can also have a FAA provides approach control services for great impact on capacity. For example, at approximately one-half of the military air- many airports general aviation, regional fields in the US; the DOD provides service commuters, and domestic and interna- to 218 civilian airfields. The DOD provides tional air traffic operate from crossing and operates almost 300 ATC facilities with or parallel runways which places even approximately 6,400 controllers; the FAA greater demands on congested terminal operates about 600 ATC facilities with ap- airspace and runways. proximately 18,000 controllers. Thus, close integration of military and civil plans is com- • Increased use of small airports. There- pulsory. fore, the use of satellite CNS will allow smaller regional airfields to accommodate increases in traffic demands at a fraction of the cost of expanding existing

2 • 46 • NEXA • ATI Global Markets large airport facilities. Governments and proximity. Vertiport services have been civil aviation authorities will recognize limited because most of these facilities the use of these smaller airfields as a do not have precision instrument ap- cost-effective way to cope with antici- proaches. Extensive use of vertiports will pated traffic growth. create an even greater network of commuter and feeder operations, extending • Small airport utilization. Smaller local the business network from downtown airports in the vicinity of major met- major metropolitan areas to suburban ropolitan areas will be able to attract areas. Even oil and gas service areas regional air carriers because of the ca- and remote rural areas, including rough pacity crunch and their newly acquired terrain such as mountainous and jungle instrument approach capabilities. Trunk- areas, will be well connected to the avia- line carriers will still continue to handle tion infrastructure. most of the traffic, especially on direct inter-city routes. However, the network of feeder and commuter operations that 2.2.3.9 National Governments link hundreds of smaller cities to each As the representative constituents of a na- other as well as to the hub airports will tion’s populace, governments have much dramatically increase. at stake with a modernized CNS/ATM infrastructure. The economic health of countries The use of smaller airports by “commut- will be more assured through advanced in- ers” will help alleviate some of the con- frastructure, particularly in areas that bol- gestion problems at the larger hubs, such ster trade and increase economic activity. as obtaining take-off slots. Inadequate Transportation infrastructure is, of course, availability of take-off slots not only adds the most important, as goods, services, and to airport and air traffic congestion, but trade can only be delivered through the also creates barriers for the introduction transportation system. of new routes and services. Establishing new routes is difficult for airlines and, as • Safety and related economic benefits. a result, most major airline activity has Airport and air traffic control systems focused on increasing the frequencies on provide components of the operation- existing routes to meet traffic demand. al environment for the safe and efficient transportation of passengers and Currently, airlines have been able to gain goods through the air. The relationship additional slots by rearranging schedules between efficient air traffic control and to transfer less busy services to off-peak airline profitability is well established in periods, which release peak-time slots developed countries, and is a necessary for more profitable operations. Coupled linkage when considering potential in- with continued liberalization measures, frastructure investment in a nation’s civil differential GNSS (DGNSS) will allow the aviation system. use of smaller airfields, which will reduce barriers to the creation of new air • Infrastructure spin-offs to other indus- routes and corresponding services. tries. A modern ATC system will help many countries in generating economic Helicopter operations. In addition to activity through airplane manufacturing, expanded service at regional airfields, airline operations, airport construction, DGNSS technology, in the long-term, will and ATC equipment manufacturing. also play a key role in the concept, development, and construction of vertiports. • Trade benefits. Air transport is an in- Currently, vertiports function primarily tegral tool for conducting much of the as landing platforms on offshore oil rigs, world’s business, a foundation for the medical emergency sites, and limited tourism industry, and a cost-effective passenger transportation facilities be- means of distributing goods and -ser tween major airports located in close vices. There are thus particular benefits

2 • 47 • NEXA • ATI Global Markets to be obtained from a sustained invest- equipment acquisition cost reductions ment in air transport because of the im- are significant over traditional equip- pact of this industry on other sectors of ment. Satellite CNS-based systems com- the economy, and the world economy plete with automation capabilities and as a whole. Increases in national income features will cost some 50 percent less will result from more efficient use of do- to acquire than traditional ground-based mestic airspace and increased access to navigation and surveillance systems. All markets of trading partners. countries will need to keep pace with the most modernized Western coun- • Reduced risk of infrastructure invest- tries in compatible ATC systems and will, ment. CNS/ATM and other aviation infra- therefore, benefit from increased afford- structure investment is viewed as rela- ability. tively low-risk with a high payback, since lending institutions can arrange payback • Common standards. Common standards mechanisms tied directly to air traffic will expand market opportunities since service user fees. Therefore, in order to the design and manufacture of ATC prod- fund the modernization and growth of ucts will be accepted by all states and smaller regional airports, nations must airlines. In addition, uniform functional consider such measures as corporatiza- requirements will allow industry suppli- tion and privatization of airport facilities ers to better focus their research and de- and air navigation services in their na- velopment, and thus assure a more likely tional economic planning. return on their investments.

Because ATI investment will compete with The purchasing trend today of most other infrastructure needs of nation states, countries involves the use of functional economic development priorities must be specifications (as opposed to detail de- revisited. A modernized CNS/ATM may well sign documents) that encourage the use be the first technological key to help maxi- of commercial-type equipment. For ex- mize the economic benefits of any nation. ample, most recently issued international tenders for automation systems have As one can see, the effects of satellite CNS specified the use of open system archi- and automation technologies, the basic tecture based on commercial software building blocks of a modern ATC system, have and hardware standards. This encourag- far-reaching economic implications, while es innovation and makes it very difficult at the same time forming a straightforward for any one manufacturer to impose its stepping-off point for many nations, partic- standards upon the global market. ularly those of less developed economies. By developing a national infrastructure mod- • Reduced risk of system development. ernization strategy that stresses small airport Sensor fusion and automation become development through this technology, coun- simplified with satellite CNS; thus, the tries will greatly enhance their return on in- risk of system development failure can frastructure investment through more rapid be minimized. For vendors this will be an economic development and greater ability important consideration. to conduct domestic and international trade. Key Points:

2.2.3.10 CNS/ATM Equipment Suppliers • Each stakeholder within the CNS/ATM Several very important benefits will accrue supply chain has a distinct interest in the to the CNS/ATM equipment supply industry. outcome of ATI programs. These benefits have been carefully forecast • Most of the benefits and interests are in our study: concentrated in maximizing resources • Affordability will mean expanded mar- considered most precious: time (for pas- ket opportunities. As mentioned, ATC sengers, ATC employees, and operators),

2 • 48 • NEXA • ATI Global Markets revenue/cost (suppliers, operators); and An important feature of civil air navigation certainty (all). since World War II and its international genesis, the 1944 Chicago Conference (establishing ICAO), subjected commercial and general aviation aircraft to orderly and pro- 2.3 Policy Trends in Global and Regional cedure/rule-based flow control in busy - air CNS/ATM Programs ways and around congested airfields where sequencing of landings and take-offs at air- CNS/ATM is the procedural and systems ap- ports would permit maximum safe utilization proach used globally to control the routing of runways. of aircraft from one airport to another. Be- cause air transport is critical to each coun- In pursuit of these objectives, ATC relied try’s economy, the importance of modern- heavily at first upon primary radar and voice ization is one of international concern. This communications with pilots. Then, specific is because global CNS/ATM increasingly does purpose radars evolved for airfield and run- not meet the needs of a rapidly growing air way control, approach control, surveillance transportation industry. of the airways and, eventually, control of taxi- way and apron traffic. As traffic intensified, This section deals with the broad institution- voice communications alone were incapable al and policy issues of existing and planned of providing adequate means of identifying a CNS/ATM infrastructure and begins with blip on the air traffic controller’s screen and, a review of the current air traffic systems because of national security issues, second- spanning most of the world. ary surveillance radar, identification friend or foe (IFF) was needed. Transponders were 2.3.1 Existing CNS/ATM Infrastructure introduced as a means of augmenting voice identification and to assist in automating ATC In general terms, the air traffic control sys- procedures. Today, Mode S transponders tem widely in use today revolves around provide digital data communications capabil- 1950s-era architecture based upon technol- ities between pilots and ground controllers ogies and capabilities largely in use at that without unnecessarily burdening voice com- time to handle modest airspace capacity. munications. While the air traffic control system in many countries is safe, it cannot handle current and projected demand adequately or effi- Routes, Hand-offs, Duties ciently, a construct which, over the long- Within the ATC structure, each controller is term, will lead to diminished safety and qual- generally responsible for a small segment ity of flying. of airspace. An aircraft is “passed” from one controller to another as it progresses on its flight plan. As an aircraft enters the sector, 2.3.1.1 History and Perspective the controller must assure separation be- In the beginning of aviation, during World tween all aircraft within that sector. This War I, pilots were clearly capable of ex- function is dependent upon the controller’s ercising a “see and avoid” procedure; air- ability to project the likely future trajectory craft-to-aircraft separation was their entire of each aircraft in the controller’s control responsibility. As air traffic expanded in the area, and to foresee and resolve conflicts in late 1920s, airlines such as Pan American, real time. Traffic is linearized, that is, fixed Lufthansa, and British Overseas Airways altitudes and routes are provided through established voice-only air traffic control each sector, which helps the controller to procedures with their pilots to track their know and visualize what each aircraft is go- aircraft and to provide their pilots with the ing to do and allows the controller to assure latest weather conditions for severe weather that separation is maintained. Each control- avoidance and landing. Later variations led ler uses a separate radio frequency which to pooling of traffic and flight service infor- requires coordination with the pilot when mation responsibilities among airlines. switching.

2 • 49 • NEXA • ATI Global Markets The air traffic controller has a duty to avoid tem has no flexibility and is inefficient in its conflicts and is, without doubt, under enor- use of airspace. mous work pressure. Not only is safety para- mount in the controller’s mind, but the ATC Airspace Categorization computer is programmed to automatically report when the separation minima is lost. The prevailing airspace architecture in use ICAO and national civil aviation authorities around the world today divides airspace into agree that multiple occurrences of the vio- two general categories: controlled and un- lation of this separation may require a reas- controlled. The primary difference between sessment of the qualifications of a given con- controlled and uncontrolled airspace is that troller. Because of this fact, and the potential ATC separation services are offered only to for controllers to lose their jobs, controllers pilots operating in controlled airspace. - Ser are very conservative about the definition of vices provided to aircraft flying in uncon- separation and often space aircraft farther trolled airspace are on a workload-permitted apart than required. basis. This division enhances the safety and effi- Aircraft Separation ciency of an air traffic control system. The Today, the operational ATC system in many type of ATC service air traffic controllers can parts of the world is largely viewed as a col- provide to commercial and general aviation lision avoidance system. Maintaining aircraft (usually thought of as IFR and VFR pilots) separation is the means by which collisions is dependent on the category in which the can be avoided. In the airspace of more mod- aircraft is operating. Furthermore, pilot re- ern air traffic areas such as Europe, the US, quirements for flying into different areas de- or Australia, where radar surveillance, bet- pend on the type of airspace. ter communications by VHF or other means, and ground-based VOR navigation are used, Uncontrolled Airspace separation criteria is a function of thesus- tainable workload of controllers, not aircraft Uncontrolled airspace is airspace in which performance. the civil aviation authority will not provide ATC clearance or separation services to any Separation today is generally conducted in aircraft, whether IFR or VFR. Flight in un- two of the four dimensions possible — lati- controlled airspace has specific regulations tude and longitude — while relegating alti- placing the burden of separation on the pi- tude and time as secondary considerations. lot. Most of the world’s airspace below a few This situation arose from the 1950s proce- thousand feet is uncontrolled. The majority dures implemented with the navigation aids of uncontrolled airspace in the US is located available at the time. away from airports below 1,200 feet above ground level. Air traffic controllers exercise positive control over the aircraft through constant - sur veillance and control by radar and radio con- Controlled Airspace - General tact. The potential for aircraft meeting within In controlled airspace the civil aviation agen- a set horizontal separation of five miles must cy or air navigation service provides both be avoided. To prevent the protective bubble ATC clearance or separation services and ad- of one aircraft overlapping with another, the ditional ATC services to pilots. However, it is controller must identify the conflict 40 to 50 dependent on the type of flight and the cat- miles from its potential occurrence and de- egory of airspace involved in which the pilot cide a resolution to avoid loss of separation. may or may not be required to use ATC services or even contact ATC facilities. The control methodology assures separation of aircraft and makes it the air traffic control- Generally speaking, if a pilot is in controlled ler’s responsibility. Although safe, this sys- airspace flying IFR, the pilot must receive ATC services, whereas contact with ATC is not re-

2 • 50 • NEXA • ATI Global Markets quired if the pilot is flying VFR in a controlled • In the US, the FAA has established a ma- airspace and is not entering special use air- jor central flow control facility to auto- space. mate and coordinate the activities of flow management. There are from 4,000 to 6,000 aircraft operating in the US NAS Controlled Airspace - VFR Flights during peak periods, and this equates to Pilots must comply with special regulations approximately 50,000 aircraft operations of the civil aviation agency in order to fly VFR per day. The role of the Air Traffic Control in a controlled airspace. For example, the System Command Center (ATCSCC) is to pilot must provide his own separation from manage this flow of air traffic within the other VFR and IFR aircraft. Certain minima continental US. The ATCSCC has been are designed to maximize the chances that a operational since 1994 and is located in VFR pilot will see and avoid other VFR and IFR one of the largest and most sophisticat- aircraft. If the pilot is unable to comply with ed facilities of its kind. these minima, VFR flight cannot be legally conducted in controlled airspace. The pilot is The ATCSCC regulates air traffic when required to either land or receive an IFR or a weather, equipment, runway closures, special VFR clearance to legally continue the or other impacting conditions place flight. A special VFR clearance will allow the stress on the NAS. In these instances, pilot to fly in certain weather conditions that traffic management personnel take ac- do not meet minimum VFR criteria. Desig- tion to modify traffic demands in order nated altitudes are assigned to minimize the to remain within system capacity. This potential for midair collisions between two is accomplished in cooperation with: 1) aircraft flying in opposite directions. airline personnel; 2) traffic management personnel at affected facilities; and, 3) air traffic controllers at affected facilities. Controlled Airspace - IFR Flights This helps minimize delays and conges- Air traffic controllers are required to sepa- tion and maximizes the overall use of the rate IFR and VFR aircraft within controlled NAS, thereby ensuring safe and efficient airspace using the most stringent proce- air travel within the US. dures. Regardless of services provided by • EUROCONTROL is the European Organi- controllers, both IFR and VFR pilots are re- zation for the Safety of Air Navigation. sponsible for seeing and avoiding non-par- Founded in 1963, it is an international, ticipating aircraft which may be operating in pan-European entity working for seam- the controlled airspace. less, pan-European air traffic management. Headquartered in Brussels, EU- Aircraft Flow Management ROCONTROL is a civil organization and currently has 39 member states. Flow control is another methodology designed to minimize route congestion by keep- EUROCONTROL coordinates and plans ing an aircraft on the ground before takeoff, air traffic control for all of Europe. This rather than having it hold in flight. Flow con- involves working with national author- trol effectively meters aircraft into and out of ities, air navigation service providers, the airways. Control rests with the CAAs and, civil and military airspace users, airports, while it has certain efficiencies, aircraft flow and other organizations. Its activities management adds to the total cost of flying involve all gate-to-gate air navigation and is a significant cost factor to airlines. service operations: strategic and tactical flow management, controller train- Aircraft flow management most often must ing, regional control of airspace, safe- be approached on a regional basis, along ty-proofed technologies and procedures, with complex system requirements to deal and collection of air navigation charges. with added factors such as multiple state All IFR flight plans are tracked by a CFMU participation, etc. For example: (central flow management unit). Each

2 • 51 • NEXA • ATI Global Markets airport and air traffic control sector has already en route would either enter the a published maximum capacity. When holding or divert to an alternate airport. capacity is exceeded, measures are taken to reduce the traffic, which is termed Flow control facilities are currently under deregulation. The aim is to utilize capacity velopment in other areas of the world where effectively, keeping the average delay as congestion is on the rise, including the Far low as possible, while ensuring capacity East and South America. is not exceeded.

As a (highly simplified) example, if two 2.3.1.2 Inefficiencies and General Economic flights are scheduled to arrive at an air- Impacts port at exactly the same time, and the A harsh economic analysis of air transport airport can handle one aircraft every five points to the fact that it is not the cost of loss minutes, one aircraft may be assigned a of aircraft or lives due to the (rare) ground or delay to ensure that it arrives five min- (rarer) mid-air collisions that occur, but the utes after the first. Similarly, the first -air cost of providing CNS/ATM procedures that craft will be required to depart on sched- maintain these enviable standards. There is ule. This way, the second aircraft will not no lack of airspace in the world; congestion need to endure a lengthy wait in the air. is largely a by-product of the existing ATC In practice, the process is much more architecture. The implementation of air traf- complex and highly computerized. One fic corridors, levels, and control area proce- aircraft may be subject to several regu- dures renders vast areas of the world’s air- lations at the same time. For example, space unusable to air commerce. Today, an a flight from Amsterdam to Paris may ATC system is designed to force a majority of be regulated both by limited capacity at air traffic into tightly defined corridors or- ar Paris as well as by limited capacity in Bel- eas where it can be “controlled” by air traffic gian airspace. controllers. In addition, the current methodology forces the airspace to fit the least ca- In some cases, it may be possible to pable aircraft. avoid delay by taking a different route. For instance, if Belgian airspace was the To confirm this, one need only stand in the only regulation for the flight in the pre- control tower at Heathrow or O’Hare air- vious example, changing the route to ports, two of the world’s busiest, and realize avoid Belgium and going via Germany how empty the sky is. The queue to land at instead might allow a flight to depart O’Hare begins on the ground at Heathrow without delay, although the route might (and elsewhere). Presently, by most stan- be a bit longer. In many cases, airlines dards, an aircraft flying over the North- At authorize the CFMU to make changes lantic is deemed to occupy a block of space in a flight’s route to avoid delay. Certain 2,000 feet high, 60 nautical miles (NM) wide flights are exempt from regulation, for and ten minutes (or 60 NM) long, and any instance, time-critical flights carrying hu- invasion of that space is regarded as poten- man organs for transplantation. If such tially hazardous. It is possible to quantify the flights are scheduled, regular traffic will cost of inefficiency of the world’s present be delayed instead. ATC system by examining:

If an airport is completely closed unex- • Cost to airlines and passengers of delays, pectedly (for instance, because the only diversions, and non-optimal routing of runway is blocked), a zero rate may be flights. set for a certain time period (e.g. until the runway is expected to be reopened), • Price of providing existing ATC services. which will cause all inbound flights to be • issued a delay that will cause them to Cost to economies of world due to loss of arrive after the reopening time. Flights efficiency (i.e., tourism industry costs).

2 • 52 • NEXA • ATI Global Markets The price of ATC services alone in the EU the future. These concepts raise far-reach- countries exceeds $15 per passenger per ing policy questions spanning areas of sov- flying hour. Airway routing itself adds- sev ereignty, finance, and airspace control, to en percent to the great circle distance in name a few. Europe, and is greater in the US. On many routes around the world, preferred flight lev- Futuristic concepts will require the extensive el is refused more times than is approved, use of: adding substantially to fuel consumption. • Required thrust varies linearly with weight, Advanced automation concepts to re- and millions of tons of fuel are consumed duce both controller and pilot workload. annually to carry large fuel reserves for ATC • Satellite CNS to alleviate the constraints contingencies that arise from unfavorable of terrestrial airway facility flexibility, clearances or terminal area delays. capacity, operations, and maintenance costs. Key Points: • Advanced cockpits, incorporating the • Due to legacy constraints in technology latest in automation, navigation, and and procedures, inefficiencies in current communications avionics, and concom- airspace management create additional itant training. layers of costs for both providers and users of air traffic systems. It is important to note that because technologies for these concepts to work are just • These inefficiencies represent an oppor- now being fielded, it will be many years be- tunity for improvement in capabilities fore most of these notions could be imple- and further investment in ATM services. mented globally.

2.3.2 CNS/ATM Modernization Programs RNP and Tunnels in Space and Policy Implications by Concept Required navigation performance (RNP) is a As detailed early in this chapter, ATC is an type of performance-based navigation (PBN) infrastructure item, and modernization as that allows an aircraft to fly a specific path such must consider the role of the support- between two three-dimensionally defined ing environment as well as other infrastruc- points in space. RNAV and RNP systems are tures (highways, electricity, telecommunica- fundamentally similar. The key difference tions, etc.). For example, a country’s national between them is the requirement for on- economic climate should be conducive to board performance monitoring and alerting. an efficient allocation of resources, there- A navigation specification that includes a by reducing the potential for investment in requirement for on-board navigation perfor- infrastructure to take resources away from mance monitoring and alerting is referred to more productive investment. Also, CNS/ATM as an RNP specification. One without such a infrastructure projects can only raise return requirement is referred to as an RNAV spec- to other resources when there is a sufficient ification. complement of other necessary resources available. For example, ATC moderniza- RNP also refers to the level of performance tion cannot occur unless a competent (high required for a specific procedure or a specific speed, redundant, fail-safe, etc.) telecom- block of airspace. An RNP of ten means that munications system is available. a navigation system must be able to calculate its position to within a circle with a radius of ten nautical miles. An RNP of 0.3 means 2.3.2.1 Evolving CNS/ATM Concepts Shap- the aircraft navigation system must be able ing Modernization Policies to calculate its position to within a circle with The world clearly needs to implement a CNS/ a radius of three-tenths of a nautical mile. A ATM system compatible with the needs of related term, actual navigation performance

2 • 53 • NEXA • ATI Global Markets (ANP), refers to the current performance of a (equipment operating but not providing navigation system while RNP refers to the ac- appropriate output) and loss of function curacy required for a given block of airspace (equipment ceases to function) are ad- or a specific instrument procedure. dressed. Dual system requirements are determined based on operational con- Some oceanic airspace has an RNP of four or tinuity (e.g. oceanic and remote opera- ten. The level of RNP an aircraft is capable tions). The requirements of aircraft fail- of determines the separation required be- ure characteristics are not unique to RNP tween aircraft. RNP approaches with RNP navigation specifications. values currently down to 0.1 allow aircraft to follow precise three-dimensional curved • Signal-in-space failures: Signal-in-space flight paths through congested airspace, characteristics of navigation signals are around noise sensitive areas, or through dif- the responsibility of the ANSP. ficult terrain. The net effect of RNP navigation specifica- The performance monitoring and alerting re- tions is to provide bounding of the TSE distri- quirements for RNP 4, Basic-RNP 1, and RNP bution. Since path definition error is assumed APCH have common terminology and appli- to be negligible, the monitoring requirement cation. Each of these specifications includes is reduced to the other two components of requirements for the following characteris- TSE, i.e. flight technical error (FTE) and navi- tics: gation system error (NSE). It is assumed that FTE is a stochastic process within a given • Accuracy: The accuracy requirement de- flight control mode. As a result, the FTE dis- fines the 95 percent total system error tribution is constant over time within a given (TSE) for those dimensions where an ac- flight control mode. However, in contrast, curacy requirement is specified. The ac- the NSE distribution varies over time due to curacy requirement is harmonized with a number of changing characteristics, nota- the RNAV navigation specifications and bly: is always equal to the accuracy value. A unique aspect of the RNP navigation • Selected navigation sensors: The nav- specifications is that the accuracy is one igation sensors being used to estimate of the performance characteristics that position, such as GNSS or DME/DME. is monitored. • The relative geometry of the aircraft po- • Performance monitoring: The aircraft, sition to the supporting navigation aids: or aircraft and pilot combination, is re- All radio navigation aids have this basic quired to monitor the TSE and to pro- variability, although the specific char- vide an alert if the accuracy requirement acteristics change. GNSS performance is not met or if the probability that the is affected by the relative geometry of TSE exceeds two times the accuracy val- the satellites compared to the aircraft. ue is larger than 10−5. To the extent op- DME/DME navigation solutions are- af erational procedures are used to satisfy fected by the inclusion angle between this requirement, the crew procedure, the two DMEs at the aircraft (90° being equipment characteristics, and installa- optimal) and the distance to the DMEs, tion are evaluated for their effectiveness since the aircraft DME transponder can and equivalence. have increasing range errors with increasing distance. • Aircraft failures: Failure of aircraft equipment is considered within airwor- • Inertial reference units: Errors increase thiness regulations. Failures are catego- over time since last updated. rized by the severity of the aircraft level effect, and the system must be designed • Areas of operation for RNP are described to reduce the likelihood of the failure below: or mitigate its effects. Both malfunction

2 • 54 • NEXA • ATI Global Markets • Oceanic and remote continental: Oce- new procedures to runways never served anic and remote continental airspace is by an instrument procedure, procedures currently served by two navigation appli- either replacing or serving as backup to cations, RNAV 10 and RNP 4. Both rely existing instrument procedures based on primarily on GNSS to support the navi- different technologies, and procedures gation element of the airspace. In the developed to enhance airport access in case of RNAV 10, no form of ATS surveil- demanding environments (RNP APCH lance is required. In the case of RNP 4, and RNP AR APCH). RNP approaches ADS-contract (ADS-C) is used. to 0.3 NM and 0.1 NM at Queenstown Airport in New Zealand are the prima- • Continental en route: Continental en ry approaches used by Qantas and Air route airspace is currently supported by New Zealand for both international and RNAV applications. RNAV 5 is used in the domestic services. Due to terrain restric- Middle East and European regions, but tions, ILS approaches are not possible, as of 2008 it is designated as B-RNAV and conventional VOR/DME approach- (basic RNAV in Europe and RNP 5 in the es have descent restrictions more than Middle East). In the US, RNAV 2 sup- 2,000 ft. above the airport level. The ports en route continental airspace. At RNP approaches and departures follow present, continental RNAV applications curved paths below terrain level. support airspace specifications which include radar surveillance and direct con- • Special Aircraft and Aircrew Authori- troller-to-pilot voice communications. zation Required approach: RNP instrument approach procedures with special • Terminal airspace arrival and departure: aircraft and aircrew authorization re- Existing terminal airspace concepts, quired (SAAAR) approach procedures which include arrival and departure, are build upon the performance-based NAS supported by RNAV applications. These concept. The performance requirements are currently used in the European re- to conduct an approach are defined, and gion and the US. The European terminal aircraft are qualified against these- per airspace RNAV application is known as formance requirements. Conventional precision RNAV (P-RNAV). Although the obstacle evaluation areas for ground- RNAV 1 specification shares a common based navigation aids are based on a pre- navigation accuracy with P-RNAV, this re- defined aircraft capability and navigation gional navigation specification does not system. RNP SAAAR criteria for obstacle satisfy the full requirements of the RNAV evaluation are flexible and designed to 1 specification. As of 2008, the US termi- adapt to unique operational environ- nal airspace application formerly known ments. This allows approach-specific as US RNAV Type B has been aligned performance requirements as necessary with the PBN concept and is now called for an approach procedure. RNAV 1. Basic RNP 1 has been developed primarily for application in non-radar, The operational requirement can in- low-density terminal airspace. In future, clude avoiding terrain and obstacles, more RNP applications are expected to deconflicting airspace or resolving envi- be developed for both en route and ter- ronmental constraints. RNP approaches minal airspace. include capabilities that require special aircraft and aircrew authorization similar • Approach: Approach concepts cover all to category II/III ILS operations. All RNP segments of the instrument approach, SAAAR approaches have reduced lateral i.e. initial, intermediate, final, and missed obstacle evaluation areas and vertical approach. They will increasingly call for obstacle clearance surfaces predicated RNP specifications requiring a navigation on the aircraft and aircrew performance accuracy of 0.3 NM to 0.1 NM or lower. requirements. When conducting an RNP Typically, three sorts of RNP applications SAAAR approach using a line of minima are characteristic of this phase of flight: less than RNP 0.3, no single-point-of-

2 • 55 • NEXA • ATI Global Markets failure can cause the loss of guidance use the corrections while computing compliant with the RNP value associated their positions to improve accuracy. with the approach. Typically, the aircraft must have at least dual GNSS sensors, WAAS addresses the navigation prob- dual flight management systems, dual lem, providing highly accurate position- air data systems, dual autopilots, and a ing that is extremely easy to use, for single inertial reference unit. When con- the cost of a single receiver installed on ducting an RNP SAAAR approach with a the aircraft. Ground and space-based missed approach less than RNP 1.0, no infrastructure is relatively limited, and single-point-of-failure can cause the loss no on-airport system is needed. WAAS of guidance compliant with the RNP val- allows a precision approach to be pub- ue associated with a missed approach lished for any airport, for the cost of de- procedure. Typically, the aircraft must veloping the procedures and publishing have at least dual GNSS sensors, dual the new approach plates. This means flight management systems, dual air that almost any airport can have a pre- data systems, dual autopilots, and a sin- cision approach, and the cost of imple- gle inertial reference unit. mentation is dramatically reduced. Additionally, WAAS works just as well between airports. This allows the aircraft to CNS/ATM: SBAS fly directly from one airport to another, New space-based CNS/ATM technologies as opposed to following routes based on will greatly reduce horizontal and vertical ground-based signals. This can cut route separation without impacting safety. Satel- distances considerably in some cases, lite ATM raises unique policy matters as we saving both time and fuel. discuss below. ICAO calls the first types of In addition, because of its ability to system a satellite-based augmentation sys- provide information on the accuracy of tem (SBAS) as shown in Figure 2-13. each GPS satellite’s information, aircraft • WAAS: The Wide Area Augmentation equipped with WAAS are permitted to fly System (WAAS) is a fully operational air at lower en route altitudes than was pos- navigation aid developed by the FAA sible with ground-based systems, which to augment GDPGPS, with the goal of were often blocked by terrain of varying improving its accuracy, integrity, and elevation. This enables pilots to safely fly availability. In operation for many years, at lower altitudes, not having to rely on WAAS is intended to enable aircraft to ground-based systems. For unpressur- rely on GPS for all phases of flight, in- ized aircraft, this conserves oxygen and cluding precision approaches to any enhances safety. The above benefits cre- airport within its coverage area. WAAS ate not only convenience, but also have uses a network of ground-based refer- the potential to generate significant cost ence stations in North America and Ha- savings. waii to measure small variations in the • EGNOS: European Geostationary Nav- GPS satellites’ signals in the western igation Overlay Service (EGNOS) is a hemisphere. Measurements from the satellite-based augmentation system reference stations are routed to mas- (SBAS) developed by the European Space ter stations, which queue the received Agency, the European Commission, and deviation correction (DC) and send the EUROCONTROL. It supplements the GPS, correction messages to geostationary GLONASS, and Galileo systems by re- WAAS satellites in a timely manner (ev- porting on the reliability and accuracy of ery five seconds or less). Those satellites their signals. The official start of opera- broadcast the correction messages back tions was announced by the European to earth, where WAAS-enabled GPS re- Commission in October 2009. According ceivers, manufactured by most GPS avi- to specifications, horizontal position ac- onics and GPS positioning companies, curacy should be better than seven me-

2 • 56 • NEXA • ATI Global Markets ters. In practice, the horizontal position surveillance. Besides the L-band GPS accuracy is at the meter level. broadcasts, MTSAT provides voice and data communications over Ku- and Ka- The EGNOS system consists of three band frequencies. MSAS operates in geostationary satellites and a network fashion similar to the WAAS and pro- of ground stations. The system started vides a comparable service to EGNOS. its initial operations in July 2005, show- ing outstanding performance in terms of Figure 2-13 accuracy (better than two meters) and SBASs availability (above 99 percent). It was certified for use in safety-of-life applications in March 2011. Since July 2005, EGNOS has been broadcasting a continuous signal. Similar to WAAS, EGNOS is mostly designed for aviation users who enjoy unperturbed reception of direct signals from geostationary satellites up to very high latitudes. The use of EGNOS on the ground, especially in urban areas, is limited due to relatively low elevation of geostationary satellites: about 30° above the horizon in central Europe and much less in northern Europe. To address this problem, in 2002 ESA released Source: European Space Agency SISNeT, an internet service designed for continuous delivery of EGNOS signals • GAGAN: The GPS-aided geo-augmented to ground users. The first experimental navigation system (GAGAN) is a planned SISNeT receiver was created by the Finn- implementation of an SBAS by the- Air ish Geodetic Institute. Commercial SIS- ports Authority of the Indian govern- NeT receivers have been developed by ment (AAI). It is a system to improve the Septentrio. accuracy of a GNSS receiver by providing reference signals. The AAI’s efforts • MSAS: The Japanese Multi-functional towards implementation of operation- Satellite Augmentation System (MSAS), al SBAS can be viewed as the first step is an SBAS designed to supplement the towards introduction of a modern com- GPS system by reporting (and then im- munications navigation, surveillance/air proving) on the reliability and accuracy traffic management system over Indian of those signals. MSAS for aviation use airspace. was commissioned in September 2007. Chief among the MSAS beneficiaries will • The project involves establishment of be aircraft operating transoceanic routes 15 Indian reference stations, three In- across the Pacific. The improved naviga- dian navigation land uplink stations, tion accuracy and associated communi- three Indian mission control centers, cations links will allow planes to operate and installation of all associated- soft closer together along the most traveled ware and communication links. GAGAN routes. is planned for operational status by the year 2014. It will be able to help pilots In addition to the GPS navigation data, navigate in Indian airspace by an accu- MSAS will provide datalinks to and from racy of three miles. This will be helpful ATC control centers and enable the au- for landing aircraft in tough weather and tomatic transmission of aircraft locations terrain like Mangalore Airport and Leh. to controllers when aircraft are out of A flight-management system based on range of ground-based ATC radars — a GAGAN will then be poised to save op- feature known as automatic dependent

2 • 57 • NEXA • ATI Global Markets erators time and money by managing ADS-B systems worldwide by expanding climb, descent, and engine performance its reach to global coverage. An ADS-B profiles. payload receiver will be hosted on each of the 81 satellites in Iridium’s next-gen- • The FMS will improve efficiency and eration satellite constellation (Iridium flexibility by increasing the use of opera- NEXT), which is scheduled to be launched tor-preferred trajectories. It will improve from 2015 through 2017. The Aireon sys- airport and airspace access in all weath- tem uses 1090ES and would be able to er conditions, and provide the ability to cost-effectively collect and process com- meet environmental and obstacle clear- mercial aircraft positional information ance constraints. It will also enhance embedded in the ADS-B message for all reliability and reduce delays by defining transoceanic and transpolar routes, as more precise terminal area procedures well as for travel across remote or un- that feature parallel routes and environ- derdeveloped regions of the world. This mentally- optimized airspace corridors. positional information is expected to be GAGAN will increase safety by using a transmitted in near real-time to ground- three-dimensional approach operation based regional ATC centers. with course guidance to the runway, which will reduce the risk of controlled • Policy implications of Aireon for ANSPs flight into terrain. Also, GAGAN will- of and commercial CNS/ATM developers fer high position accuracies over a wide are many. For the first time ever, ANSPs geographical area like Indian airspace. around the globe will be able to con- These position accuracies will be simul- tinuously track aircraft anywhere in the taneously available to 80 civilian and world. NAV CANADA, whose participa- more than 200 non-civilian airports and tion is subject to the completion of for- airfields and will facilitate an increase mal agreements in the near future (Fall in the number of airports to 500 as 2012), intends to be Aireon’s first cus- planned. These position accuracies can tomer. Aireon will enable fully global be further enhanced with ground-based and continuous space-based monitoring augmentation systems. and control of aircraft, even over oceans and remote regions where it is not currently possible. As a result of Aireon’s CNS/ATM: Space Based Surveillance – Aireon new service, commercial airline oper- and ALAS ations will be more efficient, safer, and • Iridium/Aireon: Iridium Communica- more environmentally friendly. tions, Inc. and an ANSP consortium led by NAV CANADA recently formed Aire- • Globalstar/ALAS: In June 2012, Alas- on to deploy and operate a global sat- ka-based ADS-B Technologies an- ellite-based aviation monitoring service nounced the results of its first tests of its utilizing ADS-B technology. The Aireon ADS-B Link Automation System (ALAS). system will offer a critical global exten- The April tests involved successful track- sion of current and proposed ADS-B ter- ing of two aircraft a few hundred feet off restrial systems, providing surveillance the ground in a 4,000-foot deep moun- coverage over the oceans, the poles, and tain pass, sometimes flying in close for- remote regions. This will include com- mation. The ALAS system will use the mercial aircraft surveillance in a num- Globalstar constellation of 24 low-earth- ber of regions that would not otherwise orbit satellites and will work with both have coverage, which should also help of the signal formats in use by the ADS-B accelerate the global adoption of ADS-B system: 1090ES and UAT. ALAS has been systems. under development since 2009, and the company says it expects full certification • Aireon will deploy a space-based ADS-B by 2014. The second-generation satel- aviation monitoring service to com- lites are expected to provide Globalstar plement the terrestrial component of

2 • 58 • NEXA • ATI Global Markets customers with satellite voice and data users, all while maintaining compatibility services until at least 2025. with existing GPS equipment.

• Two significant points of difference be- • GPS is owned and operated by the US tween Aireon and ALAS are the way each government as a national and, increas- uses satellites and the signal formats. ingly, global resource. The Department Aireon is offering service only for 1090 of Defense is the steward of GPS, while MHz Extended Squitter users, which in- the National Space-Based Positioning, cludes all airlines, while ALAS offers both Navigation, and Timing Executive Com- 1090ES and the UAT format preferred by mittee was established by presidential most general aviation aircraft operators. directive in 2004 to advise and coordi- ALAS requires no payloads on the sat- nate federal departments and agencies ellite constellation and plans to use the on matters concerning the GPS and re- Globalstar satellites like mirrors, simply lated systems. The executive committee retransmitting the signal received from is chaired jointly by the deputy secre- aircraft to a Globalstar ground station. taries of Defense and Transportation. Its membership includes equivalent-level officials from the Departments of CNS/ATM: Navigation – GPS, GLONASS, Gali- State, Commerce, and Homeland Secu- leo, and BieDou rity, the Joint Chiefs of Staff, and NASA. Numerous nationally or regionally spon- Components of the Executive Office of sored navigation solutions, and their associ- the President participate as observers ated policy implications, are discussed in this to the executive committee, and the section. FCC chairman participates as a liaison.

• GPS: The Global Positioning System By policy, the DOD is now required by (GPS) is a space-based satellite naviga- law to “maintain a Standard Positioning tion system that provides location and Service (as defined in the federal radio time information in all weather,- any navigation plan and the standard posi- where on or near the earth, where there tioning service signal specification) that is an unobstructed line of sight to four will be available on a continuous, world- or more GPS satellites. It is maintained wide basis,” and “develop measures to by the US government and is freely ac- prevent hostile use of GPS and its aug- cessible to anyone with a GPS receiver. mentations without unduly disrupting or degrading civilian uses.”

• Advances in technology and new de- • In the US, GPS receivers are regulat- mands on the existing system have now ed under the Federal Communications led to efforts to modernize the GPS sys- Commission’s rules. GPS receiver man- tem and implement the next generation ufacturers design their receivers to use of GPS III satellites. The GPS program spectrum beyond the GPS-allocated provides critical capabilities to military, band, a necessary requirement as the civil, and commercial users around the receivers must be able to absorb the world. In addition, GPS is the backbone Doppler effect created from receiver for modernizing the global air traffic sys- movement. In some cases, GPS receiv- tem. Advances in technology and new ers are designed to use up to 400 MHz demands on the existing GPS system of spectrum in either direction of the have now led to efforts to modernize the L1 frequency of 1575.42 MHz. Howev- system and implement the next gener- er, as regulated under the FCC’s Part 15 ation of GPS III satellites. Over the last rules, GPS receivers are not granted or decade, the US has implemented sev- warranted protection from signals - out eral improvements to the GPS service, side GPS-allocated spectrum. Recent including new signals for civil use and challenges posed by LightSquared creat- increased accuracy and integrity for all ed a number of policy issues. However,

2 • 59 • NEXA • ATI Global Markets GPS receiver manufacturers have argued well as foreign aircraft operating in Rus- that LightSquared’s licensed spectrum sian airspace. of 1525 to 1559 MHz was never envisioned as being used for high-powered • Commercial aircraft with a maximum and high-speed wireless broadband, takeoff weight of 495 kg or more are although there is no regulatory or legal also required to have GLONASS or GLON- backing of this claim. ASS+GPS navigators on board by January 2015, followed in precisely one year by • GLONASS: GLONASS is a radio-based general-purpose civil airplanes and heli- satellite navigation system operated for copters with a maximum takeoff weight the Russian government by the Russian of 5,700 kg or more. Aircraft of interna- Aerospace Defense Forces. It both com- tional make with the same takeoff weight plements and provides an alternative to parameters, flown commercially in Rus- the US GPS and is currently the only alter- sia by both domestic and foreign airlines, native navigational system in operation are expected to meet their deadlines be- with global coverage and of comparable tween January 2017 and January 2018. precision. By October 2011, the full orbit- The most recent decision is another in a al constellation of 24 GLONASS satellites series of decrees the Russian transpor- was restored, enabling full global cov- tation regulator has issued over the past erage. The GLONASS satellites’ designs four years in pursuance of a 2008 federal have undergone several upgrades, with legislation that holds all Russian passen- the latest version known as GLONASS-K. ger carriers, haulers, and shippers liable for using GLONASS or GLONASS+GPS po- Although the GLONASS constellation has sitioning capabilities. reached global coverage, its commercialization, especially development of • Galileo: Galileo is a satellite navigation the user segment, has been lacking com- system currently being built by the EU pared to the GPS system. In late 2010, and the European Space Agency (ESA). there were only a handful of GLONASS One of the aims of Galileo is to pro- receivers on the market, and few of them vide a high-precision positioning system were meant for ordinary consumers. To upon which European nations can rely, improve the situation, the Russian gov- independent of the Russian GLONASS, ernment has begun promoting GLONASS US GPS, and Chinese Compass systems, for civilian use. For example, to improve which can be disabled in times of war or development of the user segment, in conflict. In October 2011, the first two of August 2010, the Russian government four operational satellites were launched announced a plan to introduce a 25 per- to validate the system. The next two will cent import duty on all GPS-capable de- follow in 2012. Once this in-orbit valida- vices, including mobile phones, unless tion (IOV) phase has been completed, they are compatible with GLONASS. additional satellites will be launched to reach initial operational capability (IOC) • In April 2012, Rossiiskaya Gazeta, the of- around mid-decade. Full completion of ficial print media organ for the Russian the 30 satellite Galileo system (27 oper- government, published a decision by the ational + three active spares) is expected Russian Ministry of Transport to make by 2019. GLONASS or GLONASS+GPS satellite navigation equipment standard for most • The European Commission also an- civil airplanes and helicopters in Rus- nounced that the €85 million ( $104.3 sia. The measure was intended to boost million) contract for system support cov- safety and improve air traffic control, the ering industrial services required by ESA ministry stated. It has a six-year imple- for integration and validation of the Gali- mentation horizon, covering new aircraft leo system was awarded to Thales Alenia of Russian make with airworthiness cer- Space. Thales Alenia Space subcontracts tificates issued after December 2011, as performances to Astrium GmbH and

2 • 60 • NEXA • ATI Global Markets security to Thales Communications. In 2.3.2.2 ICAO Policy on CNS/ATM Systems February 2012, eight additional satel- Implementation lites were ordered, bringing the total to ICAO was created in 1944 to promote the 22 full operational capability (FOC) sat- safe and orderly development of interna- ellites. tional civil aviation throughout the world. It • Galileo is intended to provide horizon- sets standards and regulations necessary for tal and vertical positions measurements aviation safety, security, efficiency, and reg- within one-meter precision, and better ularity, as well as for aviation environmental positioning services at high latitudes protection. The organization serves as the than other satellite positioning systems. forum for cooperation in all fields of civil avi- The use of basic (low-precision) Galileo ation among its 191 member states. services will be free and open to users, In continuing to fulfill its mandate under -Ar while a high-precision capability will be ticle 44 of the Convention on International available for paying commercial users Civil Aviation, ICAO pursues a course of ac- and for military use. tion to: The Galileo system is intended primari- • Develop the principals and techniques ly for civilian use, unlike the US system, of international air navigation. which the US military runs and uses on a primary basis. Galileo will only be sub- • Foster the planning and development ject to commercial denial for military of international air transport so as to purposes in extreme circumstances. It ensure the safe and orderly growth of will be available at its full precision to civil aviation throughout the world. both civil and military users. ICAO recognized the limitations of the pres- • BeiDou: The BeiDou (Compass) navi- ent terrestrial-based air traffic control sys- gation system is a project by China to tems and developed the ICAO CNS/ATM develop an independent satellite navi- systems concept, emphasizing use of satel- gation system. It may refer to either one lite technology. ICAO considers an early in- or both generations of the Chinese nav- troduction of the new systems to be in the igation system. The first BeiDou system, interest of healthy growth of international officially called BeiDou Satellite Naviga- civil aviation. tion Experimental System, but known as BeiDou-1, consists of three satellites and offers limited coverage and appli- Cost-Effective ICAO Policy Elements cations. It has been offering navigation ICAO’s position is that the technical obstacles services, mainly for customers in China to CNS/ATM systems implementation have and neighboring regions, since 2000. been overcome, and that the main challeng- The second generation of the system, es faced by member states are currently of known as Compass or BeiDou-2, which an organizational and financial nature. Poli- will be a global satellite navigation sys- cy guidance in these two areas is largely in tem consisting of 35 satellites, is still un- place. Moreover, most of the basic practical der construction as of Summer 2012. It guidance required relating to organizational became operational in China in Decem- options, cost/benefit analysis, financial con- ber 2011, with ten satellites in use. It is trol, cost recovery, and financing has been planned to offer services to customers in developed, but will need to be reviewed and the Asia-Pacific region by late 2012, and expanded as required. to global customers upon its completion in 2020. Furthermore, while the cost/benefit work demonstrates the economic viability of CNS/ ATM systems, states and other service providers need to develop sound business cases to convince funding institutions to invest

2 • 61 • NEXA • ATI Global Markets in these systems. It is clear, therefore, that thority, or responsibility in the control more effort needs to be made by ICAO to as- of air navigation and the promulgation sist a large number of states both in imple- and enforcement of safety regulations. menting available guidance and in develop- States’ authority will be preserved in the ing business cases. Inadequate organization coordination and control of communica- of air navigation services operation and lack tions and in the augmentation of satel- of sound financial management procedures lite navigation services. may undermine the confidence of the financial community to provide these states with • Responsibility and role of ICAO: In ac- the financing required to implement CNS/ cordance with the Convention, ICAO will ATM systems components. continue to develop global standards, recommended practices, and proce- The implementation and operation of major dures for CNS/ATM systems, seeking the CNS/ATM systems components require, with highest practicable degree of uniformity rare exceptions, international cooperation in all matters concerned with the safety, because of the magnitude of investments regularity, and efficiency of air naviga- involved and the capacity that will be pro- tion. ICAO will also facilitate the provi- vided. Assistance is, however, required in sion of assistance to countries with re- many regions to establish such cooperative gard to the technical, financial, and legal ventures as well as other cooperative or joint aspects of implementation. ventures which can greatly benefit states. • Technical cooperation: In the interest of A fundamental characteristic of CNS/ATM a globally harmonious, coordinated im- systems (except for airborne equipment) plementation and early realization of the is that they are provided as part of the air benefits to countries, users, and provid- navigation facilities and services, and hence ers, ICAO will coordinate technical coop- the same basic economic principles apply to eration between and among countries. them as to other such facilities and services. What sets CNS/ATM systems apart techni- • Institutional arrangements and imple- cally from most other air navigation facilities mentation: Any new CNS/ATM systems and services is the improved technology and will make optimum use of existing- or the extension of capacity they offer, but that ganizational structure, operated to the is a difference in degree, not in substance. extent possible in accordance with ex- Consequently, policy guidance developed by isting institutional and legal regulations. ICAO on organizational and cost recovery as- Countries are encouraged to take advan- pects of air navigation services also applies tage of the rationalization, integration, to CNS/ATM systems. and harmonization of systems. It is recognized that a globally coordinated implementation, with full involvement of CNS/ATM Design Principles countries, users, and service providers The design, implementation, and operation through regional air navigation planning of all new CNS/ATM systems are required to and implementation groups is the key adhere to the following principles: to realizing the full benefits of satellite CNS/ATM. • Universal accessibility: Accessibility without discrimination governs the pro- • Global Navigation Satellite System: vision of any ICAO-backed air navigation The GNSS should be implemented as an service provided by way of CNS/ATM sys- evolutionary progression from existing tems. systems, GPS and GLONASS, toward an integrated GNSS over which contracting • Sovereignty, authority, and responsibili- states exercise a sufficient level of con- ty of contracting states: Implementation trol in aspects related to its use by civil of CNS/ATM systems will not infringe aviation. ICAO will continue to explore, upon individual states’ sovereignty, au- with users, states, and service providers,

2 • 62 • NEXA • ATI Global Markets the feasibility of achieving (e.g., own- agencies of a country deal directly with the ing) a civil and internationally controlled airline or user in provision of services. Under GNSS. the new systems, multi-national service providers such as Inmarsat may act as interme- • Airspace organization and utilization: diaries between the civil aviation authorities CNS/ATM systems will be implemented and the airlines, relationships which impose to overcome the capacity and institu- no threats to air sovereignty, authority, or tional limitations of current terrestrial responsibility in the control of air navigation ATC systems, all the while catering to- or enforcement of safety regulations. In par- ward evolving global air traffic demand ticular: and user requirements for efficiency and economy while maintaining or improv- • A state’s authority will be preserved in ing margins of safety. Countries are en- the coordination and control of commu- couraged to achieve further efficiency nications. and economy through consolidation of facilities or services. • A state’s authority will be preserved in the augmentation, as necessary, of sat- • Continuity and quality of service: Con- ellite navigation services. tinuous availability of any CNS/ATM system, including arrangements to minimize the operational impact of unavoid- 2.3.2.3 ICAO Annexes able system malfunctions or failure, as The 1944 Chicago Convention foresaw the well as achieve expeditious service re- need for international agreement on many covery, will be assured. Quality of system civil aviation topics, of which 12 annexes to service will comply with ICAO standards the original convention have been adopted. of system integrity and be accorded the These annexes concern the most important required priority, security, and protec- topics that today are still central to airways tion from interference. regulation, such as rules of the air, airways systems, and ATC practices. • Cost recovery: In order to achieve a reasonable cost allocation among all users, The annexes spell out in detail the stan- any recovery of costs incurred in the dards and recommended practices that are provision of CNS/ATM systems and ser- responsible for today’s cooperative and in- vices will be in accordance with Article tegrated global civil aviation infrastructure. 15 of the Convention and will be based Their refinement and updating remain a for- upon the principles set forth in the midable workload for the organization’s Air “Statements by the Council to Contract- Navigation Commission, Air Transport Com- ing States on Charges for Airports and mittee, and Council. Over 800 amendments Air Navigation Services.” Cost recovery to the annexes have been ratified, a high methods will not discourage the use of percentage of these having been driven by satellite-based safety services. advancing technology applications. CNS/ATM is a global concept which allows flexibility in the manner and pace of imple- 2.3.2.4 Regional Participation mentation. Satellite technology will offer The differences in air transport needs of the higher quality navigation and air traffic man- regions of the world led ICAO in 1944 to allo- agement services to be provided in all areas cate ten different regions and to devise plans of the world, a principal governed by univer- for developing the unique ATC and airways sal access, mentioned above. needs of each in a globally consistent manner. A country’s sovereignty is also an important consideration. In conventional ATC and air Regional differentiation will continue, al- navigation technologies, line-of-sight sys- though the sands may somewhat shift as tems dominate, and thus the civil aviation CNS/ATM modernization takes hold. Unique

2 • 63 • NEXA • ATI Global Markets regional elements of air transport are driv- • A clear description of the project and its en by economic health and regional trade, objectives, which should be to facilitate geographic characteristics, and even weath- (or make possible) the establishment of er patterns. These and other factors may in- an air navigation facility or service, and fluence characteristics of modernization for to reduce the cost for each participant. some time. • A clear identification of the services to be jointly financed. 2.3.2.5 Joint ATI Financing through ICAO • A clear definition of the responsibilities Arrangements for the joint financing of air of the different partners who would navigation facilities and services are admin- agree to participate. (In this regard, in- istered by ICAO upon request from states volvement of IATA as representative of and ANSPs, respectively. The provisions of the users would be useful.) Chapter XV of the 1944 Convention and ICAO Assembly Resolutions provide the opportu- • Simplicity and flexibility of the arrange- nity for joint financing arrangements. The ments which should be adapted to the general shortage of capital for the develop- circumstances of interested states and ment of facilities and the growing emphasis allow efficient implementation (“admin- on cost-effectiveness provide scope for the istrative agreements” to the extent pos- joint financing concept to be applied by two sible). or more states to enable them to share in the cost of implementing and operating air • Equitable recovery of costs, including ad- navigation facilities and services for interna- ministrative costs, through user charges, tional civil aviation. as well as consistency in general with the ICAO’s Policies on Charges for Airports In this respect, because new CNS/ATM sys- and Air Navigation Services (Doc 9082). tems have a capacity which frequently exceeds the airspace controlled by an indi- ICAO provides support to states, when re- vidual state, and because of the magnitude quested, to structure and implement ATI of the investments involved, joint financ- modernization. The basic activity is the ing-type arrangements lend themselves development and provision of policy guid- well to the implementation of a number of ance on the economics and management CNS/ATM components in situations where of air navigation services; the development it is, for example, very costly for a state to of ICAO policies on user charges; promotion act alone, or where an existing regional or- and implementation of relevant ICAO poli- ganization (ASECNA, COCESNA, EUROCON- cies and guidance material; and monitoring TROL, etc.) does not act on its behalf. Such regulatory and industry developments and components potentially would cover all the trends, such as conducting studies and re- elements of CNS/ATM, including ground- search on related issues. to-earth stations, communications satellite transponders, integrity monitoring, and sat- Specifically, ICAO helps deal with the eco- ellite-based augmentation systems required nomic, financial, organizational, and mana- in connection with GNSS. gerial aspects of the provision and operation of air navigation services, including issues re- Other possible applications of the joint fi- lating to commercialization and privatization nancing concept, where facilities and costs of ANSPs, relationships between providers involved are beyond the needs of a single and users, cost basis for charges, charging state, include development of cross-polar systems, and charges related to security and routes and calibration of ground aids. environmental protection. ICAO collects, an- alyzes and disseminates information on the A number of prerequisites are required by financial situation of air navigation services. ICAO for successful application of the joint It also conducts workshops or other informal financing concept: meetings to assist states and provides tech-

2 • 64 • NEXA • ATI Global Markets nical support to other bodies inside and out- 2.3.2.7 ICAO’s Policies on Charges for Air side ICAO on matters of its expertise areas. Navigation Services Additional and more detailed policy guid- 2.3.2.6 ICAO Policies on User Charges ance is provided in ICAO’s Policies on Charges for Airports and Air Navigation Services (Doc The basic policies established by ICAO in 9082). The contents of Doc 9082 have been the area of airport and air navigation ser- revised periodically following major interna- vices charges are expressed in Article 15 of tional conferences on airport and air naviga- Convention on International Civil Avia- the tion services economics and management, tion (Doc 7300) which sets out the following the last of which — the Conference on the three basic principles: Economics of Airports and Air Navigation • Uniform conditions shall apply to the use Services (CEANS) — was held in Montreal of airport and air navigation facilities in a in September 2008, with amendments pub- contracting state by aircraft of all other lished when required. However, the basic contracting states. philosophy and principles expressed in the policies, fairness, and equity in the deter- • The charges imposed by a contracting mination and allocation of airport and air state for the use of such airports or air navigation services costs have remained un- navigation facilities shall not be higher changed over the years. for aircraft of other contracting states than those paid by its national aircraft ICAO policies on charges differ in status from engaged in similar international opera- the Chicago Convention in that an ICAO con- tions. tracting state is not bound to adhere to the policies’ provisions and recommendations, • No charge shall be imposed by any con- unlike the articles of the Chicago Conven- tracting state solely for the right of tran- tion. However, since the recommendations sit over or entry into or exit from its terri- in the ICAO policies have been developed tory of any aircraft of a contracting state during major international conferences, or persons or property thereon. there is a strong moral obligation for states to ensure that their airports and air naviga- While the first two of these principles do not tion services cost recovery practices conform appear to have given rise to misunderstand- to the policies and philosophy set out in the ings, the third has in some instances been ICAO policies on charges. This appears to be interpreted to mean that no charges are to the general practice among ICAO’s contract- be levied when an aircraft flies into, out of, ing states. or over a state. That, however, is not the in- tent of this principle since all states are fully The policies on charges for air navigation within their rights to recover the costs of the services include the cost basis for air naviga- services they provide to aircraft operators tion services charges, allocation of costs of through charges. air navigation services among aeronautical users, charging systems, approach and aero- Two other aspects are also addressed in Ar- drome control charges, route air navigation ticle 15. The first is that states shall publish services charges, and charges for air naviga- all their airport and air navigation services tion services used by aircraft when not over charges, and also communicate them to the provider state. ICAO. This information is collected and published by ICAO in the Tariffs for Airports and Key Points: Air Navigation Services (Doc 7100). Article 15 also provides for ICAO, upon represen- • Emerging CNS technologies are opening tation by an interested contracting state, to new possibilities and potential for air review charges imposed and make corrective traffic management. recommendations thereon to the state con- • cerned. Policies put in place by ICAO must continue to control the implementation of 2 • 65 • NEXA • ATI Global Markets these technologies while adapting to regard. While it has been determined that new structures for funding the newly surveillance is accurately performed by sat- provided capabilities and services. ellite navigation augmented by ADS, it is not reasonable to assume that hostile aircraft will cooperate. Some form of radar surveillance will be required and will be present in 2.4 Other International, Regional, and the modernized CNS/ATM environment of National Policies and Air Law Instru- the developed or developing country. ments During peace time, the issue of special use Since it was first defined at the Chicago Con- airspace for training or exclusion zone pur- vention of ICAO in 1944, the Convention on poses will also complicate matters. Civil International Aviation has been accepted by countries throughout the world and is broadly adhered to by 183 member states. 2.4.1.1 NATO and Europe’s Militaries The international community has also ad- NATO and Europe’s militaries face perhaps opted a number of other legal instruments the most complicated set of requirements relevant to the work of ICAO. These instru- due to the changing circumstances facing it ments are of a bilateral or regional nature since the demise of the Cold War. Europe- that, although not sponsored by ICAO, vali- an airspace is highly militarized. With the date ICAO’s policies. reorganization of NATO’s mission into that of a regional or international peace keeper, The topic of this section is external influenc- and the now successful “Partners for Peace” es whose motivation in the regulation of air program extending membership to Eastern transport policy stem from indirect impact of European countries, Europe’s airspace ju- air transport upon their respective sectors. risdictional matters and missions are rapidly evolving. 2.4.1 National Security, Regional Security, and CNS/ATM The objective of NATO’s civil and military ATM coordination is to support the EURO- It is often the charter of the world’s militar- CONTROL member states to enhance the ca- ies to protect and maintain national borders pacity, flexibility, efficiency, safety, and secu- from deliberate intrusion. Developed coun- rity of the European aviation network, while tries operate their airspace in close coop- accommodating military aviation require- eration between military and civil air traffic ments. To deliver this, NATO’s focus is on: control authorities. This enhances national security without jeopardizing the civil mis- • Airspace management performance sion of air safety. For example, military air (ASM) and support systems. traffic control in peace time closely resem- bles civilian ATC in both equipment and pro- • Enhancing civil-military collaborative de- cedures. Special use airspace is allocated to cision-making. provide military training under real or simu- • Improving civil-military CNS interopera- lated conditions that one would experience bility. in a hostile environment. • Improving and promoting ATM security. The issue of national or regional security is of fundamental concern to the design of ef- • Ensuring a seamless military integration fective dual-use airspace and to policies and in the network. procedures that will permit the smooth and instantaneous subjugation of airspace to the • Coordinating civil-military aspects in the military in case of a national security threat. SESAR program.

Satellite CNS poses some unique and chal- Non-operational considerations and civil/ lenging issues to CNS/ATM planners in this military needs are constantly being debated.

2 • 66 • NEXA • ATI Global Markets For example, NATO is holding informal dis- policy on airspace falls under FAA Order cussions on the possibility of relocating mili- 1000.1A, Policy Statement of the FAA. It is tary training flights over congested European implemented in FAA Handbook 7400.2G, airspace. Several Eastern European countries Procedures for Handling Airspace Matters, with less capacity constraints have offered and is stated as follows: to help, and countries in Africa and North America have also suggested NATO consider • The navigable airspace is a limited their airspace for such purposes. national resource that Congress has charged the FAA to administer in the NATO and European militaries contribute to public interest as necessary to ensure ATI modernization with both technical and fi- the safety of aircraft and its efficient use. nancial assistance. SESAR is expected to lead Although the FAA must protect the pub- the way for the modernization of air traffic lic’s right of freedom of transit through management system in Europe. In their ca- the airspace, full consideration shall be pacity as airspace users, service providers given to all airspace users, to include na- and regulators, NATO and European militar- tional defense; commercial and general ies actively participate and contribute to the aviation; and space operations. ongoing definition and to the implementation of the European ATM master plan. • Accordingly, while a sincere effort shall be made to negotiate equitable solutions Although the military pursue different ob- to conflicts over the use of the airspace jectives, they operate most of the time in a for non-aviation purposes, preservation mixed civil-military environment, and they of the navigable airspace for aviation contribute directly (e.g. mixed airports, pri- shall be the primary emphasis. mary surveillance radars) or indirectly (air defense, search and rescue) to the air trans- DOD policy on the acquisition and utilization port value chain. of special use airspace is essentially an - ex tension of FAA policy along with additional The dynamic management of airspace, a provisions for planning, coordinating, man- new operational concept based on 4D tra- aging and controlling those areas set aside jectories or the setting up of collaborative under FAR Part 73 and other provisions for decision-making processes across the ATM military or special use. Airspace actions with- community, are among the most promis- in the DOD are decentralized, with each mili- ing concepts under SESAR scrutiny. They tary service having its own office to set policy all imply a high level of inter-operability of and oversee airspace matters. Airspace is- systems and procedures. As a consequence sues that require action at the DOD level are of the military requirement of access to all the responsibility of the DOD Policy Board on airspace, there will be a need to progres- Federal Aviation (PBFA), which is composed sively bring up to standards the procedures of senior representatives of each service. and performance of ground and airborne military systems used for ATM purposes. The harmonization of operational air traffic rules, 2.4.1.3 Developing Countries and Less De- the promotion of common and dual purpose veloped Countries technologies, and the development of per- Defense programs of many countries make formance based specifications will support tangible contributions to ATI modernization this paradigm shift in civil military coopera- in a number of ways, and the impact of mil- tion. itary ATI investments far outweigh those of most other military expenditures in civil return measures. Increased military involve- 2.4.1.2 DOD and the US ment in CNS/ATM modernization throughout The FAA recognizes that the military has a the developing world will continue and likely continuing requirement to conduct certain grow. An example of countries that hold ex- training and R&D activities within airspace ceptional promise as fertile CNS/ATM- mar as free from other aircraft as practical. FAA

2 • 67 • NEXA • ATI Global Markets kets for Western equipment and technolo- the world. In order to accomplish this, mod- gies are India, Indonesia, China, and Russia. ern CNS/ATM systems must be interoperable and comply with a specified set of interna- Key Points: tional standards. This is especially true since the breakup of the former Soviet Union, • Governments and militaries will contin- whose aviation standards and procedures, ue to exert control over CNS/ATM sec- excluding those available on international tors, but will also need to adapt their routes, did not comply with accepted inter- security policies to include new CNS ca- national aviation standards. Since Russia, pabilities. the NIS, China, and other countries which are transitioning to a free market economy • The procurement cycles for global mili- represent a significant portion of potential tary establishments can create signifi- global trade, the importance of interopera- cant markets for CNS/ATM suppliers. bility and requirement for global standards is imperative. Below is a discussion of the most 2.4.2 Interoperability Factors: Standards, important standards-setting bodies in ATI. Procedures, and Certification A primary concern of the international civil 2.4.2.2 RTCA aviation community is the development of The Radio Technical Commission for Aero- technical and operational CNS/ATM perfor- nautics (RTCA) was founded in 1935 and is mance standards. Standards are essential a private, non-profit organization serving to ensure interoperability of airborne and the aviation community. It provides a forum ground-based CNS/ATM equipment and to where government and industry can meet establish and maintain a common set of op- to address aviation issues and technical con- erating procedures to maintain flight safety. cepts in order to derive consensus-based Standards also provide a baseline, or min- resolutions and recommendations. In 1991, imum requirements, that ATC and avionics the organization reorganized and incorporat- equipment designers and manufacturers ed as RTCA, Inc. build to. Appropriate state aviation authorities, based on compliance with these desig- RTCA is primarily funded by member and nated standards, certify aviation equipment, international associate dues. Its member- systems, and procedures, for operation in ship includes approximately 125 US gov- their designated airspace. Certification can ernment and business entities such as the be either in compliance with national or in- FAA, Department of Commerce, NASA, DOD, ternational standards and also provides the aviation associations including the Air Line basis for conformance with legal issues and Pilots Association (ALPA), ATA, the National regulations governing operation within a Business Aircraft Association, and a variety state’s airspace system. of aviation service and equipment suppliers. Approximately 30 international associates are members of RTCA. International associ- 2.4.2.1 Importance of Interoperability and ates include EUROCONTROL, EUROCAE, the Need for Global Standards United Kingdom Civil Aviation Authority, and International air traffic will continue to Electronic Industries of Japan. RTCA’s objec- expand as modern CNS/ATM systems in- tives include but are not limited to: creasingly provide the capability for global navigation in conjunction with continued lib- • Ensuring the safety and reliability of air- eralization of state airspace policies and the borne systems. shift to a truly global economy. International • Developing minimum operational expansion requires that all aircraft must nav- performance requirements for docu- igate using a common set of procedures and ment-specific systems. systems in order to navigate from point A to point B (seamless navigation) anywhere in

2 • 68 • NEXA • ATI Global Markets • Developing guidelines for use by a regu- solicit a consensus-based set of recommen- latory authority that the given authority dations on issues that are critical to the suc- determines appropriate. cessful implementation of NextGen. It is also a forum to obtain a commitment of resourc- • Providing administrative and logistics es and/or synchronized planning between resources that enable teamwork among government and industry that will support the world-wide aviation community (e.g. and, when necessary, identify opportunities ICAO and the International Telecommu- for industry participation in NextGen imple- nication Union, and others). mentation.

As a consensus-based organization, RTCA In conducting its work, the committee will is able to significantly impact the civil avia- foster a common understanding of success tion community. RTCA is often called upon with joint performance objectives and devel- to provide technical guidance and minimum opment milestones to be reviewed as imple- operational performance standards for avi- mentation progresses. The committee will ation navigation, communication, and- sur primarily focus on implementation issues veillance. RTCA forms committees to take including prioritization criteria at a national action on these various aviation issues and level, joint investment priorities, and loca- announces its meetings in the Federal Regis- tion and timing of capability implementa- ter so that they may be open to all interested tion. The committee will provide a venue for parties. Parties involved in RTCA committees the FAA as well as industry partners to report are volunteer authorities from government on progress on the implementation of Next- and industry who meet to discuss operation Gen operational capabilities and associated and technical ramifications of a given subject airspace performance improvements. and then develop consensus recommendations. Program Management Committee Consensus recommendations are presented The Program Management Committee to the RTCA governing body, which will either (PMC), established December 1977, man- approve the special committee report or re- ages the technical federal advisory commit- quire that additional analysis be performed tee-related business of RTCA (but does not by the committee. Approved recommenda- include the NAC and its subcommittees/ tions are published and made available to work groups). The PMC establishes special the public for sale. RTCA recommendations committees in response to an identified are often used as a basis for business deci- need by government and industry. The PMC sions. Furthermore, because RTCA serves approves the terms of reference (TOR) for as a federal authority committee, its recom- the special committee, approves the chairs, mendations often provide the basis for gov- reviews recommendations, and reports and ernment policy decisions. approves, modifies, sends back for addition- RTCA committees have most recently been al work, or disapproves these recommenda- involved with ATI are: tions and reports.

NextGen Advisory Committee RTCA Special Committees The NextGen Advisory Committee (NAC), Several examples of important special com- established in September 2010, is a poli- mittees are: cy-level federal advisory committee tasked • Standards of Navigation Perfor- with developing a common understanding of mance: SC-227, Standards of Nav- NextGen priorities in the context of overall igation Performance, established NextGen capabilities and implementation December 2011, is developing nav- constraints, with an emphasis on the near igation standards intended for de- and mid-term (through 2018). The commit- signers, manufacturers, and install- tee provides a venue where the FAA can ers of avionics equipment; airspace 2 • 69 • NEXA • ATI Global Markets managers and service providers; (MOPS) for Aircraft VDL Mode 2 Physical and the users of these navigation Link and Network Layer. systems for worldwide operations.

The revision to DO-283, Minimum 2.4.2.3 EUROCAE Operational Performance Standards The European Organization for Civil Aviation for Required Navigation Performance Equipment (EUROCAE) is a nonprofit orga- for Area Navigation, will provide guid- nization which was formed in 1963 to pro- ance for the development of airspace vide a European forum for resolving techni- and operational concepts needed to cal problems with electronic equipment for obtain the benefits of enhanced nav- air transport. Similar to RTCA, it has special igation capability in the aircraft. It will committees set up to address technical and also provide the minimum set of re- standards issues. quirements needed to demonstrate compliance with the performance EUROCAE deals exclusively with CNS/ATM and functions in the MASPS while aviation standardization (airborne and enabling compliance with the PBN ground systems and equipment) and related operations envisioned to support documents as required for use in the regu- Next-Gen and SESAR. The MOPS lation of aviation equipment and systems. will also be compatible with the up- EUROCAE is governed by a constitution and coming ICAO navigation specification functions according to procedures estab- for advanced RNP, to be published in lished over 50 years of activities in the devel- the update to the ICAO PBN Manual, opment of aviation standards. Document 9613. The EUROCAE Council is made up of a min- • Standards for Air Traffic Data Commu- imum of eight and a maximum of 20 mem- nication Services: SC-214, Standards for bers elected every year by the full members Air Traffic Data Communication Services, at the general assembly. All council mem- established March 2007, is developing bers have a high level management position documents in support of NextGen for ser- in their own company or organization. The vices in defined environments through president and the secretary general (being 2020. Data communications in support the council secretary) are members of the of NextGen and SESAR initiatives will council. At its first meeting (usually immedi- introduce services that allow evolution ately after the general assembly), the council from the current workload-intensive, elects its chairman, vice-chairman, and trea- voice-based air traffic control concepts, surer. In addition the council establishes the to collaborative, management-by-excep- schedule and place of its next meetings. tion operations. Advanced datalinks between ground and airborne systems are EUROCAE Council envisioned to increase capacity allowing greater user access and more efficient The main role of the council is to: flight routing. • Discuss and to endorse all important • The committee completed DO-306, operational and strategic decisions (stra- Change 1, Safety and Performance Stan- tegic work plan, budget, partnership dard for Air Traffic Datalink Services in agreements, working processes, etc.). Oceanic and Remote Airspace (Oceanic SPR Standard) in March 2011. In March • Approve the creation or re-orientation 2012 it completed DO-305A, Future Air of working groups and to endorse their Navigation System I/A – Aeronautical objectives (terms of reference or TOR). Telecommunication Network Interoper- • Decide on the publication of EUROCAE ability Standard (FANS 1/A – ATN B1 In- Documents (ED). terop Standard) and DO-281B, Minimum Operational Performance Standards

2 • 70 • NEXA • ATI Global Markets • Prepare, in collaboration with the gener- in line with the ongoing GBAS ground al secretariat, the next general assembly equipment implementation. Further- and symposium. more, WG-28 updates the ED-88 MOPS for airborne Multi Mode Receiver for ILS • Supervise the secretary general’s admin- and MLS to include GNSS and changes istration of the association. to referenced standards, given that sufficient participation is confirmed. Con- EUROCAE council members in 2012 are: sideration is given to Cat II/III develop- • EUROCAE president: Jean-Paul Platzer ments in the ICAO NSP and RTCA and to (Airbus). propose future EUROCAE work on GBAS CAT II/III when appropriate. • Council chairman: Patrick Souchu • (DSNA). Automatic Dependent Surveil- lance-Broadcast (ADS-B). Chairperson: • Council vice-chairman: Steve Barber (UK Michel Procoudine (Thales Air Systems). NATS),. The scope of this group is to consider the airborne and ground user needs for • EUROCAE treasurer: Bruno Ayral (Thales ADS-B and the preparation of the con- Air Systems). sequential guidance documents for its component and associated systems in • As a member of right, the secretary gen- accordance with ICAO and in harmoniza- eral: Abdoulaye N’Diaye. tion with similar activities in RTCA.

Industries and Organizations Members are: • Datalink Application NextGen & SESAR. Airbus, AustroControl, BAE Systems, Das- Chairperson: Danny Can Roosbroek (EU- sault, DFS, DSNA, EASA, EUROCONTROL, GE ROCONTROL). The scope of this group is Aviation, Indra Sistemas SA, NATS, QINETIQ, the development of standards to define the SESAR Joint Undertaking, Thales Air Sys- the safety, performance, and interopera- tems, and Thales Avionics. bility requirements for air traffic services (ATS) supported by data communica- To develop EUROCAE standards and related tions. The group will introduce services documents, EUROCAE organizes working that allow evolution from the current groups (WGs) where members provide ex- workload-intensive, voice-based air traf- perts working on a voluntary basis. In gen- fic control concepts to collaborative, eral, the WG members come from the as- management-by-exception operations; sociation membership, but others may be and advanced datalinks between ground accepted under specific conditions regarding and airborne systems are envisioned to the organization they belong to and their increase sector-based traffic capacity, particular expertise. allowing greater user access and more efficient flight routing SESAR Advisory Working Groups Key Points: The most important working groups are listed below: • In an effort to maintain outreach, there are numerous working groups speaking • Global Navigation Satellite Services. on behalf of industry stakeholders. Chairperson: P. Ladioux (DSNA/DTI). WG-28 is tasked to update the ED-114 • Working groups and other industry or- MOPS for the GBAS ground subsystem ganizations must continue to push to to support Cat I precision approach op- improve interoperability to allow new erations and optionally the GBAS Posi- technologies to facilitate, and not limit, tioning Service. The MOPS is kept com- policy constraints on future air traffic patible with the ICAO Annex 10 GBAS management. SARPs. The testing section is updated

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