CANSO Global ATM Summit

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Kristopher Allen
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1 CANSO Global ATM Summit Bangkok, Thailand 12 June 2011 Eamonn s fingerprints are all over this event and when he called to ask me to do this, it was in a very general sense that he put the question to me and I agreed, foolishly. But when he sent me the topic for this session, it did concern me a wee bit. It starts off with the slightly worrying phrase Drawing on his broad experience. I did wonder what that should cover and more particularly, what did Eamonn intend it to cover when he put it on the programme? Some of you may be familiar with a British television series Yes Minister, which was very popular some years ago and they used to talk about the need to learn proper grammar with these things called irregular verbs I have broad experience, you have changed careers more than once, he has never held a job long enough to get found out.. I don t know which of those three Eamonn was thinking of but what broad experience do I have? What right do I have to be stand here in front of you today, talking about these things? Well, if you look back to the dim and distant past I did briefly flirt with politics, I confess. But then I was told, or maybe I told myself, that I was too honest to be a politician, so I became a diplomat you ll have heard the definition A diplomat is an honest man sent abroad to lie for his country. So I was sent to a number of embassies over my time. I spent five happy years at one stage in the British Embassy in Washington, addressing transport questions and negotiating issues on the Airbus financing dispute nothing much changes! Now Washington is a very strange place it s a lovely place but it s a very strange place, full of lawyers and that s even by American standards where I get the impression that half the population seem to be lawyers. Indeed, I understand that America has so many lawyers now that they are starting to use them for experiments, instead of using rats. There are two main reasons for this. First, by using lawyers they ve managed to avoid a lot of the negative PR they were getting from using rats. And secondly, there are some things that rats, unlike lawyers, just won t do Apologies to all the lawyers in the room! Back to the UK and a move to the Department of Transport. I ll come back later to the privatisation of NATS. But it wasn t just aviation and it wasn t just moving things into the private sector. I also had the dubious privilege of running the renationalisation of the UK s railway infrastructure. If nothing else, that helped me understand what the limits are on moving industries into the private sector. For example, and just as an aside, if you re thinking of moving to just in time maintenance, then I can strongly recommend, based on my experience with rail, that a good first step is to create an asset register just so that you have some idea of what it is that you have to maintain.(thanks for that, McKinseys)

2 Aviation again, this time as Director General of Civil Aviation. An interesting and exciting time in which we negotiated the EU/US air services liberalisation deal. And I negotiated for Europe on the environment at two ICAO assemblies, working with Roberto and his colleagues. That s a very European pedigree and indeed I m now Director General of EUROCONTROL so how on earth can I stand here and talk about what States worldwide need to do? Well I ve represented one as a Director General of Civil Aviation. I ve been involved in airline, airport, ANSP, shipping and railway regulation. And I m leading an intergovernmental organisation which operates, I think, at the frontier between States and Industry. Here I use the term industry to include everybody from ANSPs through airlines, through airframers all the way to equipment manufacturers. And I am responsible for the running of an ANSP, even though I have never been an air traffic controller. This is in contrast to my friend Graham Lake, who started his career as a controller in the UK. He assures me he s much better now. EUROCONTROL s ANSP is, of course, the Maastricht Upper Area Control Centre which provides services in the upper airspace of Belgium, the Netherlands, Luxembourg and part of Germany. Strangely, it is not yet a member of CANSO but that s another story. I mention Maastricht in particular because it is unique. It covers several countries. That means that those countries have, in effect, subcontracted the provision of air traffic services in their upper airspace to a third party. Personally, I think that s pretty remarkable. And it works. More than that, it works extremely well it s among the very top performers in Europe. It s a leader on new technologies. It also integrates very well with the military we have controllers for military aircraft there, sitting alongside their civilian counterparts. Now, I m not saying that this is a model that works necessarily in all parts of the world. And I m certainly not saying that it was easy to get there or indeed to stay there, but it does show what can be done if people are willing to cooperate together. So, bearing that in mind and to come back to the question, what can States do to make a cost-effective, efficient and seamless global air traffic management system a reality? Well, if Eamonn will allow me, I ll answer this element of his examination question in a number of parts. The first of these is What do you want the States to do? The next is What do they want to do? And then there s the tough one How do you get them to align their position with yours? Now I m not being Machiavellian here. I certainly don t agree with the civil servant in Yes Minister when he said Politicians are like children, you can t give them what they want, it only encourages them. However, there is a definite skill in aligning the interests of politicians with those of your organisations. So, first part of my answer, what do you want them to do? Well I can only hope that you do want the politicians to help you make a better ATM system. But what does that mean in practice? For me, a big first step is to stop politicians, governments and regulators getting too focused on the idea of sovereignty. For governments, that means working with

3 neighbours and for example - accepting that it s neither necessary nor in my view practical for each individual country to have a competent regulatory authority. So what else? Another useful thing the politicians can do is to be much more open to new ideas when looking at how to operate a more cost effective Air Traffic Management system. And a significant part of that is challenging monopolies. For example, there s now good evidence of savings being made through opening up the provision of airport tower services. And why can t you put out to tender the provision of meteorological services as well? Indeed, if you work with your neighbours, there are quite a lot of opportunities for common procurement. We at EUROCONTROL have, for example, been coordinating a project in Europe on the joint procurement of IP based voice and data communication services. Of course procurement is not primarily the responsibility of the States, although let s face it they do tend to get involved when the subject of significant investments come up. But there are also things that only governments can do like change the law. For example, legal changes are often required if you want to put in place a Just Culture with largely blame-free reporting. Not easy but very important, because it s only with full and open reporting that you can really understand where the safety concerns are. Of course, that s not always a popular thing for some politicians to support, at least publicly. It s also difficult for politicians to support the need to promote the wider regional ATM network possibly at a cost to their particular country. However, it s vital. We in Europe may be in a unique position here a patchwork of relatively small countries coming together in a network that contains some of the busiest airspace in the world. But having said that, the Gulf is becoming very much like that, very much like Europe. And our experience in Europe is that it is tough to take that network view: for example, to accept an increase in delays in your ANSP by taking more flights because the ANSP next door is overloaded; or to accept that everyone should pay for a service that will benefit the whole network even though you don t happen to need it yourself; or to implement a system that isn t fully justified in your country but is important for the network as a whole. But the network is becoming more important and is also growing, both in scope and geographically. It has to include airports after all, that s where we can expect the bulk of the future bottlenecks. It has to include the military we need to share the airspace. And it has to be as wide as possible. Flights arrive from everywhere and we need to think globally. And that global approach is another area where States can help. We heard this morning from Roberto Kobeh that we re coming up towards the next ICAO Air Navigation Conference in Now these tend only to occur around once a decade so the decisions taken next year will have a major influence on the system well beyond States need to get involved and to engage with their ANSP to make sure that the most is made of this rare opportunity.

4 Because decisions made at ICAO will better reflect the needs of everyone if everyone is involved and not just the usual suspects such as Europe and the USA. I think it s also the case that a government, which has been involved and which understands the issues, is more likely to make informed decisions later when it comes to topics such as capital investment. Now all this is fine in theory. However, before we present this shopping list to the States, it s worth posing the question What do they want?. In the field of aviation, what drives politicians, regulators, governments? Well modern aviation is now over 60 years old, if we count from the end of the Second World War. But it is still not treated like a normal, modern industry, at least in most places. Airlines are the furthest down that path, with privatisation common, the concept of the national flag carrier fading, multi-national alliances growing in strength; low-cost models proliferating. But even they are not normal businesses. Many operations are still controlled by the ICAO bilateral route right system invented back in 1948 or modernised versions of it. Now that s not everywhere. We have seen US deregulation and open skies policies and then we ve seen EU liberalisation inside the single market and multilateral negotiation for access to that market. These initiatives have certainly driven market improvement and resulted in keener prices and better services. But the markets remain distorted. Cross-border mergers are still prevented by burdensome ownership and control rules; safety regulation depends on the state of registry, not the state of operation. For example, ask Eamonn about Ryanair s fleet he s responsible for regulating aircraft that are based all across Europe, not just in Ireland. Now it is true that competition is fierce. I ve seen reports that the airline business has, over time, lost more money that it has ever earned in profits. To be honest, I m not entirely sure whether that s strictly true; but it s certainly the case that huge losses have been made and that, if you are an investor, there are easier places to secure a decent return in the employment of your capital. And even though there are some genuinely profitable operators, we do see, time and again, Governments interfering in the market either to prop up, to subsidise, or even to rescue their struggling national carriers. Why is this? Well, it s a complex answer; there are concerns linked to this rather outdated concept of sovereignty; there are worries about ensuring the operation of an essential service after all, aviation is part of the life blood of a modern economy; and there s the fear of losing control over a key lever of national life. Much the same can be said for other sectors, such as electricity production, but somehow they lack the potency of aviation in politicians hearts. Of course, many of these same arguments apply to air traffic control. But ANSPs typically do not need rescuing. After all, you are much further from the harsh economic realities than are airlines. Of course, you face huge problems. But you are

5 essentially monopolists with protected markets; in many parts of the world there is little challenge to the rates you decide to impose So what politicians want is, first, to make sure that a service is provided in part because they have an international obligation to do so, but principally because, without the service, their country would be cut off from the world. Second, they want to retain some control. They see ATM as part of the national infrastructure and they want to make sure that in times of emergency they can ensure exactly what happens in their airspace. Third, they want to keep well-paying jobs in their jurisdictions, especially if these are in out of the way places. Fourth, they are quite interested in safety and very interested indeed if something s gone wrong. Of course, they d also like ATM to be provided cheaply or to ensure that, if there is a margin to be made, it finds its way into national coffers.. But I think that s pretty secondary, in truth. But the interesting thing is that most politicians only think these things subliminally because, in reality, they hardly think about ATM at all. If there is no volcanic ash and ATM is working tolerably well, it does not rise up the news agenda; if there are few delays, no one is interested; if there have been no accidents or serious incidents, nobody notices. But when things go less well, ATM can rise quickly right to the very top of the news agenda and, at least in countries with an active media, the politicians will react very quickly indeed so watch out for knee-jerks all over the place when that happens. So States need to take the time to think through what it is that they really want from ATM. And they need to do this when there is no immediate pressure to do so and when there will be few, if any, immediate results. Now, trust me, that s a very big ask from any Government. And they ll need your help and encouragement to do it. The good news, though is that they will not feel threatened by the timescale. Because a decade is a lovely long period of time for a politician. At least two elections will probably occur in that time, so decisions taken will be for successors to take through. And those successors will be able to blame the less popular items on their predecessors. So, with a bit of luck, something actually happens and everyone wins. Of course, if you re not so lucky, then it can take quite a long time for things to happen. After all, the creation of the Single European Sky is not exactly happening at the speed of light. Indeed you might think that s what EUROCONTROL was first created to do back in But seriously, as we all know, you do need to plan ahead in ATM. Yes, there may be a few quick wins. But really significant change does take time, money and consistency of purpose. So how can we help politicians see the light and answer Eamonn s exam question?

6 Well actually I would argue that it is the people in this room who will make this happen, rather than States or politicians. But they need to facilitate your delivery of these important goals. So and I am using this analogy carefully they are the psychiatrists to your light bulb. How many psychiatrists does it take to change a light bulb? Well, only one; but the light bulb really has to want to change. This brings me to the nub of my argument. If you want Governments to facilitate change, you have got to be very clear with them about what that change is; and you have to be very clear with them and with your workforces who have very different issues and concerns that you are ready for the consequences. You are, I think, stuck with being monopolists for the en route business, for the time being at least. Poor you! But you can be efficient monopolists. So, are you willing to agree to stiff economic regulation that bears down, year after year, on your costs and charges? Regulation that also holds you to tough performance indicators? Are you willing to argue for real separation between service provision and regulators in your countries, thus demonstrating the independence and the effectiveness of the regulator? Are you also willing to second some of your brightest and most capable staff to the regulator in order to make sure that it has the expertise needed to do its job? There s a lot in the saying that industries get the regulators they deserve Are you willing to get involved with the military accepting that they have their job to do, understanding their constraints and working in partnership to share the sky and make the whole system work more efficiently? And are you also willing to declare that you agree to merge with neighbouring providers so as to reap economies of scale, for example on procurement, training etc. As well as arguing with your regulators for regional airspace planning programmes that ignore FIR and other political boundaries in favour of efficient route structures? And agreeing to the establishment of regional centres to manage high level traffic flows, perhaps operated by someone other than you? And finally, are you also willing to agree that parts of your business for example airport towers really don t need to be inside the monopoly envelope? Because if you are willing to argue these things you also need to be willing to accept something else. You need to therefore to accept, and to persuade your workforce, that not everybody can be a winner in all this? Winners, greater efficiency almost certainly also mean losers, job losses or relocation, closures. Because if you the operators are willing to stand up and say all this, you stand a pretty good chance of rocking the trees hard enough to see that low-hanging fruit being eaten. Politicians will see you being willing to clear obstacles, not create them. But if you are not willing to commit yourselves in this way, then don t expect States to sort your problems any time soon, or in a logical and methodical way. Of course, eventually they will react to your problems, but they will do so quickly and unpredictably, as a response to events. That s a high risk strategy; and not one that I would advocate.

7 Now I don t pretend that it s easy to get your State to take these sorts of decision. EUROCONTROL is governed by 39 States, so I know what it s like interacting with them. But we do need to do what we can. And that s because, at least for most of us, doing nothing is just not a viable option. Traffic is increasing again, very rapidly in some parts of the world such as the Middle East, Asia and Africa. IATA reports that revenue passenger kilometres in the Middle East rose last year by about 18%. If that rate of increase were to continue, traffic would double in just over four years. We, you, need to be able to cope. On the technical side, ICAO standards are changing. The sort of equipment in aircraft will also be changing again let s be frank, driven largely by mandated requirements in Europe and the US. As the equipage changes, so do the expectations of the airspace users they want to be able to use this expensive kit that they re being forced to buy. In many ways, that s good news for the rest of the world you can upgrade your systems, confident that aircraft equipage rates will be relatively high. There is also a growing pressure on everyone to make air transport as environmentally friendly as possible. For airlines, this makes financial sense as well if they can save fuel at the same time. So you can expect ever increasing demand for direct routings and continuous descent operations and so on. And lastly, there is now recognition that the network is becoming truly global in scope. For many airports around the world a significant proportion of their flights don t even come from the same region, let alone the same country. Heathrow, for example, has over a third of its flights coming from outside Europe. We all have to communicate with each other, to plan with each other and to help each other. So, returning to our friends the politicians, what can be done? Well, even though it may be difficult, I urge you first to listen to them to understand what drives them. Then demonstrate your willingness to change and show the benefits that can come from that change and your willingness to accept the consequences. If you can get them thinking about ATM before the crisis comes, then you re halfway there. Thank you!

1 ANDREW MARR SHOW, 31 ST MARCH, 2019 DAVID GAUKE, JUSTICE SECRETARY

1 ANDREW MARR SHOW, 31 ST MARCH, 2019 DAVID GAUKE, JUSTICE SECRETARY 1 ANDREW MARR SHOW 31 ST MARCH 2019 DAVID GAUKE, MP JUSTICE SECRETARY AM: Mr Gauke, is Theresa May s deal now finally and definitely dead? DG: Well, I m not sure that one can say that, for the very simple