International Civil Aviation Organization

World-wide CNS/ATM Systems

Implementation Conference

Rio de Janeiro, 11 – 15 May 1998

WW/IMP–WP/4

4/2/98

Item 2

Agenda Item 2:	Institutional issues

2.1	Organizational structures at the national level, including private sector participation

2.2	Co-operative and sub-regional approaches, including multinational air navigation facilities and services

NATIONAL ORGANIZATIONAL AND INTERNATIONAL CO-OPERATIVE ISSUES

(Presented by the Secretariat)

Action Paper

SUMMARY

The organizational structure or form under which CNS/ATM systems and air navigation services in general are operated is fundamental to the financial viability of their provision. With the growing demand being placed on financial self- sufficiency, States around the world have been reviewing the organizational structures under which their air navigation services are operated which has led to increased financial and operational autonomy at the national level and increased international co-operation. This action paper addresses national organizational and international co-operative issues aimed at assisting States in the implementation of CNS/ATM systems. Conclusions appear in paragraph 3 and Recommendations proposed for adoption by the Conference in paragraph 4.

Support Papers

WW/IMP-WP/14 (Basic organizational characteristics of air navigation services provision)

WW/IMP-WP/15 (Specific organizational characteristics pertaining to CNS/ATM systems)

WW/IMP-WP/16 (Organizational forms at the national level)

WW/IMP-WP/17 (International co-operative ventures)

1.	Autonomy at the national level

1.1	A principal factor in the improvement over recent years in the financial situation of air navigation services (and airports) has been the trend towards financial and operational autonomy. The trend is accelerating towards air navigation services (and airports) being operated by autonomous authorities established specifically for that purpose rather than civil aviation administrations (as they still remain in the majority of States).

1.2	An autonomous authority refers to an independent entity or body established for the purpose of operating certain facilities and providing specific services, and being granted operational and financial freedom to carry out its functions. Autonomy can take many forms and does not necessarily mean privatization (although privatization is one form of autonomy) since ownership can rest in public or private hands or a mixture of both. A single autonomous authority may operate both airports and air navigation services and that authority may be in the form of a civil aviation authority. Regardless of the organizational form under which air navigation services are provided, according to Article 28 of the Chicago Convention it is the State that is ultimately responsible for the provision and operation of air navigation facilities and services.

1.3	The benefits that normally accrue from autonomy are those associated with the introduction of corporate or commercial-type management as opposed to direct government administration and usually result in improved operational efficiency and managerial control. Particularly important in the context of CNS/ATM systems financing is the improved control autonomy provides over revenue flows both in terms of their generation as well as in their application towards servicing debt obligations such as, for example, loans taken out to finance CNS/ATM systems implementation. ICAO encourages the establishment by States of autonomous authorities to operate their airports and air navigation services or both1.

1.4	More information on organizational forms of the provision of air navigation services at the national level is provided in WW/IMP-WP/162.

2.

2.1	International co-operative ventures in the provision of air navigation services have normally proven to be highly cost-effective for provider States and the users served alike, and in some instances constitute the only means for implementing costly facilities and services which offer capacity that exceeds the requirements of individual States. By co-operating in such facility or service provision the States concerned are able to provide more efficient services and at lower cost than if they were to finance the facilities concerned themselves. Major CNS/ATM systems components are typical of such facilities and services where international co-operation is essential. Various forms in which such co-operation can or does take place are briefly summarized below with more details provided in WW/IMP-WP/172.

2.2	International operating agencies

2.2.1	An international operating agency is a separate entity assigned the task of providing air navigation services, principally route facilities and services, within a defined area on behalf of two or more sovereign States. The services such an agency provides are usually in the categories of air traffic services, aeronautical telecommunication, search and rescue (essentially rescue co-ordinating centres) and aeronautical information services, but can extend to meteorological services for air navigation as well. These agencies are also responsible for the operation of charges collection systems for the services provided. Examples of international operating agencies are ASECNA in Africa (which operates airports as well as air navigation services), COCESNA in Central America and EUROCONTROL in Europe.

2.3	Joint charges collection agencies

2.3.1	Another effective, if less encompassing, means for States to benefit from co-operation in their provision of air navigation services would be to participate in the operation of a multinational charges collection agency. This is because States individually operating route facilities and charging for the services rendered are involved in considerable accounting work, and may also encounter collection difficulties where there is a substantial volume of overflying traffic.

2.3.2	Such an agency would collect route air navigation services charges on behalf of all of the participating States, including those which are overflown. The agency would then transfer to each participating State the charges revenue collected on its behalf. Added to each charge levied for each participating State would be a small fee or percentage to cover the State's share of the agency's costs. Start-up funds required for the acquisition of premises and data processing and other equipment, pre-operational training, etc, should normally not pose a major problem since they could be obtained through a financing institution, including a commercial bank. The loan would be repaid over a few years, with instalments and interest being included in the agency cost element that would be added to and recovered through the route air navigation services charges billed and collected by the agency. For the agency to be cost-effective several States would need to be involved. Separate agencies could be established in different regions. Considering that route air navigation services charges are an essential source of revenues, it is important that the States themselves singly or collectively remain fully in control of the charges collection function.

2.3.3	ICAO is prepared upon request to assist States in establishing joint charges collection agencies, including purchase of necessary equipment and training of nationals from the participating States to operate the agency. The cost of ICAO's assistance could be recovered inter alia from the charges.

2.4	Multinational facilities and services

2.4.1	A multinational ICAO navigation facility/service is essentially a facility or service included in an ICAO regional air navigation plan for the purpose of serving international air navigation in airspace extending beyond the airspace serviced by a single State in accordance with that regional air navigation plan. Elements of the satellite communications systems required to implement the CNS/ATM concept operated for groups of States represent examples of prospective multinational air navigation facilities/services while an earlier global example is the world area forecast system (WAFS).

2.5	Joint financing-type arrangements

2.5.1	The basis for the joint financing concept is that certain air navigation facilities and services may be too costly for a State to provide and operate alone for the benefit of international civil aviation at large. This is recognized in the Chicago Convention where Chapter XV lays down the basic principles for "joint support" action if a State applies to ICAO for financial or technical aid or if the Council acts on its own in offering assistance to remedy a situation that might impair the safe, efficient and economical operation of international air services. Two Agreements concluded under Chapter XV, one with Denmark, the other with Iceland, are currently in force. The Agreements cover the operation and financing of facilities and services provided by Denmark and Iceland for civil aircraft flying across the North Atlantic, north of the 45°N latitude. These services comprise air traffic control, communications and meteorology. Financial responsibility is assumed by a group of 23 States whose Governments contract to the relevant Agreements, including the two provider States. The responsibility for the administration of the Agreements rests with the ICAO Council and the Secretary General, on behalf of the Contracting Governments.

2.5.2	The joint financing concept used for the Danish and Icelandic agreements has also been adopted for the administration by ICAO of a height monitoring systems programme operated jointly by six States providing air navigation services on the North Atlantic.

2.5.3	As another example of a joint financing-type arrangement, ICAO has, on request of the governments concerned, developed and is now administering the Satellite Distribution System (SADIS) Cost Allocation and Recovery (SCAR) scheme.

2.5.4	ICAO's administration of all the arrangements concerned has proven most successful and cost-
effective from the viewpoint of the contracting governments involved.

2.5.5	Joint financing-type arrangements would lend themselves well to the implementation of a number of CNS/ATM systems components in situations where it is, for example, very costly for a State to act alone or where an existing regional organization (ASECNA, COCESNA, EUROCONTROL etc.) does not act on the States's behalf. Such components include integrity monitoring and wide area augmentation systems required in connection with the GNSS, and could also include ground earth stations (GES) and sharing in the use of communications satellite transponders.

3.

Conclusion 2/1

Significant economies and increased efficiency result at the national level from assigning the operation of air navigation services to autonomous authorities.

Conclusion 2/2

International co-operative efforts in general permit the more efficient provision of major air navigation services; and with regard to major CNS/ATM systems components in particular this may often be the only feasible alternative.

Conclusion 2/3

Servicing of loans taken to finance CNS/ATM systems components is greatly facilitated at the national level by the existence of autonomous authorities operating air navigation services, and also at the national and/or international level by co-operative efforts such as joint charges collection agencies.

4.	Recommendations Proposed for Adoption by the Conference

Recommendation 2/1

States which have not already done so should establish autonomous authorities to operate their air navigation services.

Recommendation 2/2

States should:

a)	establish joint charges collection agencies whenever this would increase efficiency in charges collection;

b)	consider, where appropriate, development and/or participation in regional or global co-operative ventures to provide CNS/ATM systems components; and

c)	consider, where appropriate, requesting ICAO to administer cost-recovery schemes for CNS/ATM components or to provide other administrative services for co-operative ventures in the provision of CNS/ATM systems components or air navigation services in general.

Recommendation 2/3

ICAO should:

a)	make better known the expertise it possesses and the neutral advice and services it can provide with regard to the administration of international co-operative cost recovery schemes for CNS/ATM systems components in particular and air navigation services in general; and

b)	upon request actively assist States in establishing joint charges collection agencies and in the development of international co-operative ventures to provide CNS/ATM systems components and air navigation services in general.

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