Controlling Air Traffic Costs Internationally

Cost cutting is not just an airline thing. The services of air navigation service providers (ANSPs)--the term air traffic controllers call themselves--have steadily become cheaper in real terms over the past decade.

The main reason for this has been a change in the way that governments perceive aviation. The days when ANSPs were run exclusively by the state are coming to an end, as are the days of state-owned airlines.

With the pull back of government has come hardheaded business efficiencies and an understanding of how best commercial practices and improved bottom-line results have emerged.

"When we restructured our business in the late 1990s," says an Airservices Australia official, "we aimed to reduce costs by 25%, cut our prices [to the airlines] by 25% but increase profitability over five years. In fact, we did it all in three."

As a result of this growing commercial nous, the relationships of ANSPs--especially some of the most sophisticated ones--with the airlines they serve has changed. National carriers, for instance, have become shareholders in their newly privatized ANSPs.

A good example of this can be found in the UK's air traffic control organization, Nats. When it entered its public-private partnership in 2001, seven UK-owned carriers--British Airways, bmi British Midland, Virgin Atlantic, Britannia, Monarch, easyJet and Airtours--known as the Airline Group, took a stake in the company.

Similarly in the privatization sale of DFS, Germany's air traffic control organization, planned for later this year, Lufthansa and Air Berlin look like being leading bidders for a stake.

But this is more than an if-you-can't-beat-them, join-them strategy. These airlines know that their lobbying pressure from the boardroom can produce real results. It also gives both sides an inside track as to how the other works--and it is not just in lower air traffic control fees; it is to be found in the greater efficiency of the ANSPs.

Improved performance

Whether it is directly because of airline shareholder pressure or not, Nats' improved performance has been impressive over the past three years--landing delays are now measured in seconds rather than minutes.

Given that an average 737-300 is burning a $2.50 gallon-worth of jet fuel at a rate of about 15 gallons (100lbs) a minute, savings havebeen made when calculated annually.

But the collaboration can be worked out in different ways. Two recent examples make the point. Over the past year Airservices Australiahas pioneered new flight plans, called flex tracks, which lower fuelusage and reduce flight time.

Flex tracks allow airlines to obtain benefits from the prevailing winds--particularly the fast-moving jet streams--using a track published daily by Airservices Australia.

Qantas, Cathay Pacific, Emirates, Virgin and Singapore, the airlines that partnered with Airservices in the trials, say they have shownsubstantial savings. An official for Airservices Australia says: "Itis conservatively estimated the systems will ultimately contribute to airline fuel savings in excess of AS5 million [$3.5 million] a year, based upon flight time savings."

Emirates reported a fuel saving of 90 tonnes in 15 days. Flights to and from Singapore will be the prime beneficiary of the system--however, Airservices Australia expects that flights from other Asian cities, such as Kuala Lumpur or Jakarta, will also gain benefits.

In Europe, Luftfartsverket, the Swedish ANSP, has been developing a new fuel-saving system at Stockholm's Arlanda Airport. The principle being pioneered is called 4D trajectories. That means creating a precisely defined trajectory for the whole of a flight, defined by the four dimensions of latitude, longitude, altitude and time.

This is put into an aircraft's flight computer, as well as the ANSP's computers, and provides the basis for knowing exactly where each aircraft is at all times.