Ec sesar deploy tf draft final report

Ref. Ares(2011)703688 - 29/06/2011

EUROPEAN COMMISSION DIRECTORATE-GENERAL FOR MOBILITY AND TRANSPORT DIRECTORATE E - Air Transport E.2 - Single sky & modernisation of air traffic control

Brussels, 01.04.2011 – V2.0

TASK FORCE FOR SUPPORTING THE COMMISSION IN DEFINING A DEPLOYMENT STRATEGY FOR THE

SINGLE EUROPEAN SKY TECHNOLOGICAL PILLAR

DRAFT FINAL REPORT

This draft final report captures the main outcome from the Experts Group established by the Task Force to support its work in defining a deployment strategy for the Single European Sky Technological Pillar.

This version should be considered as the Report from the Experts Group to the Task Force. It is provided with a view to support Task Force's discussions at its closing meeting on 7 April. If adopted by the Task Force, it would become the Report from the Task Force to the Commission.

At chapter 6, this version includes, preliminary conclusions drawn from discussions at Experts Group level. They are provided for consideration by the Task Force when developing its own conclusions and recommendations to the Commission.

It is underlined that Commission's participation into the Experts Group was limited to the roles of moderator and secretarial support. Therefore, the present document does not reflect the views from the Commission but only those from the designated experts1.

1

List of experts with their affiliation is provided at annex 2 to the report.

Commission européenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11.

Table of contents 1

2

3

EXECUTIVE SUMMARY ......................................................................................... 4 1.1

Funding and Financing ...................................................................................... 4

1.2

Governance........................................................................................................ 5

1.3

Main conclusions............................................................................................... 7

PRESENTATION OF THE TASK FORCE ............................................................... 9 2.1

Overall process and objective............................................................................ 9

2.2

Organisation: terms of reference and participants............................................. 9

2.3

Planning........................................................................................................... 10

THE BASELINE ....................................................................................................... 11 3.1

3.2

3.3

3.4

4

The deployment of SESAR ............................................................................. 11 3.1.1

Terminology and scope ..................................................................... 11

3.1.2

Prerequisites ...................................................................................... 12

3.1.3

Risks and potential impact on SES policy......................................... 12

3.1.4

Cost of deployment............................................................................ 12

Role of the European ATM Master Plan for deployment ............................... 13 3.2.1

Legal status........................................................................................ 13

3.2.2

Maintenance and execution ............................................................... 13

3.2.3

Deployment planning activities......................................................... 14

Core functions to govern SESAR deployment................................................ 15 3.3.1

Deployment Planning ........................................................................ 15

3.3.2

Deployment Support and Coordination............................................. 15

3.3.3

Deployment Monitoring and Reporting ............................................ 16

3.3.4

Financial Management/ , i.e. coordination of funding and financial resources ............................................................................. 16

3.3.5

Enforcement ...................................................................................... 16

Initial views on potential funding and financing mechanisms ........................ 16 3.4.1

Candidate funding and financing mechanisms.................................. 17

3.4.2

Available Cost Benefit Analysis for SESAR deployment ................ 19

3.4.3

Need for public funding..................................................................... 20

ANALYSIS IN SUPPORT TO ASSESSMENT OF POLICY OPTIONS ............... 23 4.1

Lessons learned – existing experience ............................................................ 23 4.1.1

From past deployment exercises ....................................................... 23

4.1.2

From the particular case of IP1 ......................................................... 24

2

4.2

4.3

5

From PPP governance: the SJU and the changes introduced by the implementation of the SESAR PPP........................................ 25

4.1.4

Synthesis of lessons learned : the main success and risk factors ................................................................................................ 26

The transition from R&D to deployment ........................................................ 28 4.2.1

Validation .......................................................................................... 28

4.2.2

Standards ........................................................................................... 29

4.2.3

Large scale production, market developments and fair competition ........................................................................................ 30

4.2.4

Certification....................................................................................... 31

SES framework................................................................................................ 34 4.3.1

Generalities........................................................................................ 34

4.3.2

Use of existing SES instruments ....................................................... 34

4.3.3

Need for additional instruments / need for adaptation of existing instruments........................................................................... 36

4.4

Financing, funding and costs benefits analysis ............................................... 36

4.5

Pan European dimension ................................................................................. 38

4.6

International cooperation................................................................................. 39

ASSESSMENT ......................................................................................................... 40 5.1

5.2

6

4.1.3

Methodology.................................................................................................... 40 5.1.1

Governance options for assessment................................................... 40

5.1.2

Assessment framework, criteria and detailed results ........................ 41

The Assessment results overview.................................................................... 41 5.2.1

General remarks................................................................................. 41

5.2.2

Option 1 - High level steering through existing SES framework.......................................................................................... 42

5.2.3

Option 2 - Designation of the "Network Manager"........................... 43

5.2.4

Option 3 – “Establishment of a European partnership” .................... 44

CONCLUSIONS ....................................................................................................... 47

ANNEX 1: TERMS OF REFERENCE OF THE TASK FORCE..................................... 50 ANNEX 2: PARTICIPANTS............................................................................................ 56 ANNEX 3: WORKING SCHEDULE............................................................................... 58 ANNEX 4: ASSESSMENT GRID.................................................................................... 59

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1

EXECUTIVE SUMMARY In March 2009, the Council of the European Union asked the Commission to present proposals for the preparation and transition to the deployment phase of the SESAR Programme, focusing on the establishment of appropriate governance and funding mechanisms. In order to assist the Commission in developing a concrete proposal to the Council in the course of 2011, DG MOVE has set up a dedicated Task Force.

This executive summary provides an overview of its main findings.

1.1

Funding and Financing

The implementation of SESAR will generate significant economic, environmental and strategic value for Europe as a whole. A 10 year delay in implementation of SESAR could potentially represent a direct negative GDP impact of over 150 billion for EU-27 and a loss of energy efficiency of over 150 million tons of CO22.

However, SESAR deployment requires total investments exceeding 30 billion Euros and the early funding and equipage of SESAR equipment (airborne and land-based) is a major challenge to deliver as soon as possible the performance expected from the implementation of the new technologies.

Difficulties in SESAR deployment financing result from the partial disconnection between investments and benefits during the transition phase: an airline investing in a new airborne equipage will not see any benefit before the Air Navigation Service Providers have made the corresponding investment. On the other hand, for an ANSP, the business case may not become positive until a significant number of aircraft are equipped. It is important to note that State aircraft, in particular the military, have no positive business case when implementing SESAR and the funding of the upfront costs must be resolved. Finally, there may be some changes with an overall network benefit and positive business case but requiring some stakeholders to invest whilst this will remain a net cost for them. In this case funding should be made available.

As a result, operators are inclined to adopt a reactive rather than a proactive stance (last mover advantage). Therefore, funds made available by the EU for supporting deployment would be used to govern a synchronized and rapid adoption of the SESAR technology by the operators (airspace users, airports, air navigation service providers). Furthermore, in order to ensure the continued investments in R&D and Innovation, additional funds in line with those available for the current R&D phase would be needed for the future period 2014 – 2020 in the ATM field.

To achieve the pace necessary to meet the ATM performance targets, it is estimated that SESAR deployment would require around â‚Ź 3.0 billion of EU funds, that would be leveraged combining different financial facilities at the moment under discussion, such as but not limited to own resources from industry, project financing solutions (loans or project bonds), guarantees, loans from commercial banks and the EIB, for the period between 2014 and 2020, as follows:

2

Preliminary result, SESAR Macroscopic Impact Study

4

• Use of dedicated EU funds: – Co-financing: ground infrastructure investments of ANSPs and airports to synchronize Deployment Plans, very much like the R&D working arrangements. The possibility of using such funds to co-finance airborne infrastructure investments would need to be carefully reviewed, notably in the light of WTO constraints (see also “TEN-T grants below”).

– Pre-financing: ground and airborne investments during the transition phase (possibly linked to a fund arrangement, see below).

• TEN-T grants, considering that an important part of the investment concern the ATM ground infrastructure and the introduction of innovations; • Innovation resources, taking into account that SESAR can be considered one of the most innovative projects for transport in line with the EU2020 Initiative. SESAR in fact contributes to sustainable green growth, employment, cost reductions and efficiencies; • The route charges mechanism and in particular within this framework, the “common projects” process which, under SES comitology, enables direct access to route charges for common projects; • The ETS in accordance with recital 7 of SES II: “Member States should be free to decide how revenues generated by the auctioning of aviation sector allowances under the Emission Trading Scheme are to be used and to consider in this context whether a share of such revenues might be used to finance common projects at the level of functional airspace blocks”.

In addition, the feasibility of a financial structure such as an equipage fund is under investigation, which would provide pre-financing capability to relevant stakeholders (in particular airspace users) during the transition phase and remove the last mover advantage will be defined and validated in 2011. Such a financial structure would leverage the capabilities of the EU and also help address the demand and technology risks associated to the implementation of SESAR. This required allocation of EU funds is consistent with previous estimates and represents one third of the implementation costs for the period 2014-2020, the two remaining thirds, as was done during the SESAR development phase, are being borne by the industrial partners and the airspace users. This is different from the US where the development and deployment of next generation ATM technology relies mainly on public funding.

Without an effective allocation of EU resources to support SESAR it is unlikely that the programme will be implemented in time.

1.2

Governance

It is essential that funding and financing mechanisms are developed and managed in a consistent and structured manner, in order to support the implementation of the 5

ATM Master Plan. To this end, new arrangements are needed for the governance of the Deployment Phase to guarantee that coordination mechanisms are effective and any public funding is allocated in an efficient and transparent manner.

It is equally essential that SESAR Deployment Packages are implemented in a synchronised manner, consistently throughout the European ATM system to maximize the positive impact of SESAR. Within Europe, but also where relevant at global level, this requires coordination, synchronisation and optimisation of deployment plans across countries and stakeholders.

A number of principles must be taken into account for the successful governance and roll-out of the SESAR deployment phase: • Positive business cases and industry buy-in have to remain the driving force to allow the successful deployment of SESAR; • Regulation, that traditionally takes a long time to be implemented (at least 1 year), should only be used where necessary in accordance with "better regulation" principles to reach agreements and to support enforcement of commitments across the diversity of Member States and stakeholder interests; • Essential Regulations, Implementing Rules, Community Specifications and EASA Certifications Specifications that supports the deployment of SESAR will form a regulatory roadmap to be developed by the Commission and kept consistent with the ATM Master Plan as an integral part of it.

Lessons learnt from past technology deployment exercises in the field of ATM and from PPP governance indicate a need to combine the following factors for success: • Clear and sustained commitment of different stakeholders; • Project oversight/governance/management adapted to the case; • Existence of a demonstrable benefit to large majority of stakeholders; • Clear leader in ensuring harmonised and interoperable system upgrades and synchronised deployment; • Industry clearly involved in the investment decision making process on what to do and when to do it, followed by permanent monitoring of the deployment progress; • Adaptation of the implementation planning to the actual operational circumstances of the providers, industry and airspace users, both civil and military; • Gradual deployment strategy, with pioneers, incentives, and appropriate time for product development, standardisation, certification, deployment and optimisation; 6

• Working closely with industry and certification authorities, adjusting working arrangements and processes as appropriate; • Implementation of globally agreed standards.

In addition, a number of key attributes need to be reflected in the governance of SESAR deployment: • Independence; • Accountability; • representation & participation; • decision recognition; • timing for set up; • structural costs; • link with R&D. Finally, the following core governance functions were identified: • Planning; • Coordination; • Monitoring; • Financial management; • Enforcement.

1.3

Main conclusions

• There is a need to move from the current distinctions of the three options to concentrate on the governance and functions aspects of the SESAR Deployment Programme Management; • The “High level steering through existing SES framework” is the basis for the governance at a political/institutional level for SESAR deployment.

However, even expanded, it cannot be considered alone an effective scenario to ensure SESAR deployment; • The “Network Manager” is a key player in the SESAR deployment being responsible at the end for the day-to-day network performance at technical and operational level. However, even expanded, it cannot be considered alone as sufficiently effective scenario to ensure SESAR deployment; • There is a preference to define and establish a “Programme Management” entity or vehicle which shall be able to address the following: 7

– Synchronization of deployment plans, deployment support and coordination, deployment monitoring and reporting, management of the risks and coordination of the implementation of the mitigating actions, coordination of the funding and financial resources, establishment of implementation agreement for the deployment; – The driving and commitment of the industry, in particular the Airspace Users, ANSPs, the Network Manager, Airports and the Institutional level (for the necessary independence, oversight and enforcement) in order to perform the aforementioned functions Each role and responsibility shall be clearly defined; – The governance mechanism of this vehicle shall be formalized in a legally binding framework, where the participant members directly integrating this mechanism shall commit to invest, deliver and contribute to the buy-in by those who are not directly participating (cascading model); – Consideration should be given to establish the vehicle as an EU body in order to ensure the necessary Institutional/political oversight by the Member States, the European Parliament, including the European Court of Auditors and any relevant body, to benefit of tax exemption, leverage EU capabilities for funding and financing, to have the necessary positioning in the International environment for discussing interoperability aspects and other relevant relations for the SESAR Deployment; – The Programme Management vehicle should be provided with the adequate tools to support the deployment of those packages that bring benefits for the overall Air Transport community, providing ad hoc support for the regional and local level when requested or needed; – The Programme Management vehicle should be in the position, where appropriate, to distribute resources through public procurement procedures to execute projects.

– The formal link with the responsibility to execute the Master Plan, including Risk Management, is maintained.

– That projects for the deployment of specific features/changes should also consider making use of innovative arrangements, including of a PPP nature, to ensure their most effective implementation – That there is a need to further define the scope of the "SESAR deployment Programme" to be the subject of the governance and/or management of deployment, in particular in the context of the subsidiarity principle and the responsibilities conferred to different actors by the SES regulations.

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2 2.1

PRESENTATION OF THE TASK FORCE Overall process and objective

In March 2009, the Council of the European Union asked the Commission to present proposals for the preparation and transition to the deployment phase of the SESAR Programme. In particular the Council requested the Commission to focus on the establishment of appropriate governance and funding mechanisms. The first assessment of the Commission's services on the key issues related to SESAR deployment resulted in a Commission staff working paper, issued in December 2010. The working paper identified 10 general principles, a number of focus areas and three initial deployment governance options as a basis for further consultations and analysis. The Commission's objective is to prepare and present a concrete proposal to the Council in the course of 2011.

The Commission is required to perform a detailed impact assessment to support its proposal. An essential element of this assessment is the consultation of the stakeholders that would be affected by the proposal. Considering the specific nature of the subject and in order to assist the Commission in its analysis, DG MOVE has set up a dedicated Task Force composed of high level representatives of the main European organisations that play a role in the implementation of the Single European Sky and of SESAR, its technological pillar.

In particular, the Task Force members and their experts have been asked to provide their views on the three proposed governance options and governance and financing requirements that would, in the light of their competences, expertise and relation with their stakeholders, ensure synchronised and efficient deployment of SES technologies and procedures. The conclusions of the Task Force will constitute an essential input to the Commission's impact assessment.

2.2

Organisation: terms of reference and participants

The members of the Task force were: the European Commission, the Eurocontrol Agency, the European Aviation Safety Executive Agency and the SESAR Joint Undertaking. The Task Force was chaired by the Commission.

To carry out the detailed work, including the stakeholder consultation, the Task Force has established a group of expert. The Eurocontrol Agency, the European Aviation Safety Executive Agency and the SESAR Joint Undertaking have designated experts to address the specific tasks assigned by the Task Force to the Experts Group. The Commission has designated its representatives with the objective to moderate the discussions in the Experts Group and provide secretarial support. Commission representatives did not participated as experts and did not influence the contents of the discussions. The Commission has also ensured appropriate involvement of military stakeholders together with experts from the European Investment Bank and the industry through the ICB. A stakeholder consultation process was embedded in the Task Force. However, the very tight schedule has strongly reduced the opportunities for direct and specific consultations. Social Dialog partners were consulted on 2 February and a Financial Workshop took place on 18 February. In addition, Members of the Task Force and 9

Experts were invited to make use of existing consultation mechanisms within their respective organisations but lack of time has prevented in depth internal debates.

The Task Force and its Experts Group constitutes a temporary working arrangement to support the Commission in its work to prepare a proposal for a deployment strategy for SES technologies and procedures. They will be closed down after having reported to the Commission.

Terms of reference are attached as Annex 1. Lists of participants in the Task Force and in the Experts Group are attached as Annex 2.

2.3

Planning

The detailed planning is attached as Annex 3. It identifies dates for Task Force Meetings (4 in total) and Experts Group meetings (5 in total) as well as specific consultation events (2 in total).

It is underlined that, thanks to the commitment of all participants to the Task Force, the planning initially agreed by the Task Force at its inaugural meeting in January 2011 has been met fully with no delay.

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3

THE BASELINE

This chapter reflects the common understanding of the Task Force when initializing its work plan. This is the baseline on which analysis, assessment and, then, preliminary conclusions for consideration by the Task Force are built.

3.1 3.1.1

The deployment of SESAR Terminology and scope

SESAR deployment The governance and financial mechanisms for SESAR deployment, when up and running, shall address relevant on-going or still to be launched deployment activities and projects, as defined in the European ATM Master plan (Master plan), regardless of which implementation package (IP1, IP2, IP3) or release (2011, 2012, etc.) they belong to.

The Master Plan presently defines the path to achieve the performance objectives. Notion of Implementation Packages 1, 2 and 3 is vanishing. On the “offer” side, the essential discriminating factor is the maturity achieved on specific proposed improvements/enablers in terms of technical/operational validation and business case: those which are mature enough should be the subject of deployment. On the “demand” side, the performance and service requirements of challenging reference operating environments should be the basis to determine the required changes and their dates of availability. The current IP1 with its contents attached to a 2013 date should therefore not be taken as an immutable notion although the reasons of the delay of some of its initial features should be analysed and measures taken to prevent them to occur again where possible.

SESAR Deployment Packages It is a collection of enablers for one or a group of stakeholders, with attached business case, for one or several operating environment(s), to be deployed together in a given time frame, in response to performance requirements, against a given baseline It is essential that SESAR Deployment Packages are implemented in a synchronised manner, consistently throughout the European ATM system to maximize the positive impact of SESAR. Within Europe, but also where relevant at global level, this requires coordination, synchronisation and optimisation of deployment plans across countries and stakeholders.

This process is integrated with the management of R&D activities to be able to ensure an effective transition of R&D results to Deployment (development of Deployment Packages, associated Business Cases and deployment scenarios). This process is closely linked to formalized SESAR-NextGen coordination processes, existing standardisation processes (EUROCAE, RTCA, etc.) including the military and the respective regulatory structures (SES, ICAO, etc.).

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Technological change proceeds slowly: significant change requires 5 to 10 years. This time span meshes poorly with the planning objectives of most ATM stakeholders today. Although most stakeholders have 5 year plans, a large proportion of their activities are designed to be implemented within 1-2 years. Most stakeholders outline their strategic objectives on the short-term production needs. That’s not a time horizon appropriate for significant technological change and the process will have to take this into consideration.

3.1.2

Prerequisites

Positive business cases and industry buy-in have to remain the driving force to allow the successful deployment of SESAR. Regulation, that traditionally takes a long time to be implemented (at least 1 year), should only be used where necessary in accordance with "better regulation" principles to reach agreements and to support enforcement of commitments across the diversity of Member States and stakeholder interests.

Essential Regulations, Implementing Rules, Community Specifications and EASA Certifications Specifications that supports the deployment of SESAR will form a regulatory roadmap to be developed by the Commission and kept consistent with the Master Plan as an integrand part of it.

3.1.3

Risks and potential impact on SES policy

Not integrating R&D planning and coordination and Deployment planning & monitoring would increase the following risks: • Delayed deployment; • Lack of synchronisation; • Lack of incentives, no business priority; • Financing, limited resources – relation between deployment costs and performance (cost efficiency target); • Technical risks, complexity, need for control & flexibility - Connection between development and deployment; • Delay in standardisation, regulation; • No buy in by those entities/stakeholders with a negative business case.

3.1.4

Cost of deployment

The Experts Group has not identified any updated figures regarding the cost of SESAR deployment. Therefore, all financial discussions took place on the basis of the estimations available in the current version of the European ATM Master Plan (Edition1, 30 March 2009, chapter 4).

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3.2 3.2.1

Role of the European ATM Master Plan for deployment Legal status

The Definition phase of SESAR, co-funded by Eurocontrol and the European Commission, delivered mid-2008 the SESAR ATM Master Plan, covering all aspects of the future European ATM System.

On March 30th 2009, the Council of the EU adopted a Decision through which the SESAR ATM Master Plan was endorsed as an initial version of the European ATM Master Plan (as provided for in article 1(2) of Council Regulation N°219/2007) amended by Council Regulation (EC) No 1361/2008 of 16 December 2008). The SES II Regulation (EC) No 1070/2009 which entered into force 4 December 2009 makes a number of references to the Master Plan.

Thus, even if the European ATM Master Plan cannot be considered as binding as a regulation/European law, its endorsement by the Council gives it an uncharacteristic but yet a very significant value at political and industrial level.

The European ATM Master Plan indeed defines in detail how the new ATM system should be developed and deployed: • It presents how and by when the European ATM system needs to be enhanced to respond to evolving performance needs. It also defines what and when Stakeholders should deploy. It defines for each topic: when R&D should start, by which target date it has to be completed and how much time is foreseen for initial implementation.

• It defines the expected benefits in several areas: ANS cost effectiveness, capacity and quality of service, the need for financial incentives is clearly identified for certain stakeholders in order to secure the timely implementation of ATM improvements.

• It focuses on the management of risks associated with SESAR Programme.

It allows all stakeholders to agree on what has to be undertaken to successfully implement it.

• It shows a standardisation and a regulatory roadmap to facilitate a smooth and timely implementation of the SESAR technologies and procedures.

3.2.2

Maintenance and execution

The European ATM Master Plan is the cornerstone of the SESAR Programme, both for its development and deployment phase. As a living document, it is expected to evolve to fulfil even better stakeholders’ expectations and the needs of the Programme.

In the spirit of Council Regulation N°219/2007, the Master Plan will be maintained and regularly updated within the SESAR work programme under the authority of the SESAR Joint Undertaking. The SESAR Joint Undertaking Administrative Board plays the pivotal role in managing the 13

execution of the Master Plan while ensuring, through a formal process, the appropriate commitment of the Member States and all other relevant ATM stakeholders.

The Master Plan maintenance process consists in gathering and analyzing the information that impacts the planned ATM “solution”, including societal, performance, business orientations, as well as the actual evolution of the air traffic situation and of the ATM system, and the results of development and validation work.

Information comes from different mechanisms, in particular: • STATFOR; • ESSIP/LSSIP monitoring function, which is also an integrand part of the Master Plan; • PRB/PRC Performance Review Reports and target setting; • Network Operations Reports; • Regional, national and/or local Reports.

The result of this activity materialises in a report on European Implementation Progress and Deployment. The Master Plan becomes thus the most appropriate tool for overall deployment monitoring.

3.2.3

Deployment planning activities

The Master Plan in turn triggers the detailed deployment planning, in application of the SES provisions. The subsidiarity of the responsibilities request pro-active execution of the planned actions at local, national, regional, FAB and network scale.

The iterative nature of the planning and its progressive stabilisation and firmness, provides time for stakeholders to refine arrangements for the implementation activities. This will make the system more robust even facing big unexpected events, With reference to the SES Performance Scheme in each reference period and the longer term forecast of the traffic demand, different operating environments are then assessed in terms of performance requirements. They are used to determine the suitability of possible operational deployment packages. These proposals for deployment packages are the subject of a business case and an assessment of financing implications, for example to determine the need for overall or specific financial Schemes and/or Incentive Schemes and/or regulation. The regulatory and/or standardization requirements support timely and synchronised deployment are defined as well. The Deployment Packages will allow to describe and to communicate to the stakeholders information on what concretely has to be done and in what sequence (while maintaining the synchronised view between stakeholders), so that continuous progress monitoring is possible.

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The Master Plan's added value with respect to deployment focuses on the following aspects: • A Performance based deployment planning, to provide a reference for R&D and to anticipate detailed deployment planning and coordination.

• A regularly maintained bridge between development and deployment, bringing together in a consistent and complementary manner all relevant information on the performance based evolution for European ATM. • Creating synergies among stakeholders for projects with local responsibility, that can lead to additional cooperation initiatives, (e.g. through FABs), through common approaches such as common procurement, thereby offering potential for further coordinated projects.

3.3

Core functions to govern SESAR deployment

Given the current lack of coordination amongst stakeholders on deployment activities, the SESAR Deployment governance should ensure 5 core functions: 3.3.1 Deployment Planning

It includes: • Synchronisation of individual deployment plans; • Changes control/changes management; • Standardisation and regulatory roadmaps; • Risk management; • Updated costs.

3.3.2 Deployment Support and Coordination

It includes: • Synchronised execution of the planning; • Human factor, social aspects at horizontal level; • Communication; • Coordination with the political level; • International relations; • Capacity to coordinate with industry; • Management of common projects.

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3.3.3 Deployment Monitoring and Reporting

It includes: • Execution/verifying performance; • Deployment cost oversight.

3.3.4 Financial Management/ , i.e. coordination of funding and financial resources 3.3.5 Enforcement 3.4

Initial views on potential funding and financing mechanisms

SESAR deployment is viewed from a different angle across the various stakeholder groups. This is in line with the preliminary CBA results from the definition phase, where the allocation of net benefits is not symmetrical across all stakeholders. Also there are large differences within stakeholder groups (e.g. the Business Case for airlines differs widely depending on business models, average stage length, home base location, fleet age etc ...).

However, although there are no insurmountable obstacles to deployment as such, certain stakeholders may be faced with specific challenges. For instance, certain Airspace Users may require short investment payback periods, while others may be cash-stranded, or without easy access to capital. Similar concerns may also exist at certain European ANSPs in particular in the context of the implementation of the Performance Scheme. Furthermore, as was indicated in the definition phase, the Military and General/Business Aviation stakeholders may be faced with a negative Business Case.

One way to alleviate such concerns would be to setup effective funding, financing and policy solutions providing additional support for the deployment of SESAR. Essentially, this would entail the creation of appropriate incentives for SESAR stakeholders to support technology adoption. For instance, the injection of public funding would not only send a strong signal on EU’s commitment to deploy SESAR, but also enable to effectively execute the deployment of SESAR in line with the objectives defined in the ATM Master Plan. Additionally, the implementation of a Best Equipped Best Served policy would significantly improve the diffusion of SESAR technologies, accelerate network benefits.

Synchronizing Deployment Plans is especially complex when the Business Case is not positive for every entity and payback periods differ significantly. In addition, a major risk for deployment is the issue of last-mover advantage. Essentially, this entails the deferral of investments by each stakeholder, until all the others have also deployed (often deadline of an Implementing Rule), by which time only benefits can be captured.

Funding/financing solutions should be considered jointly with other mechanism (e.g., regulatory, evolution of governance arrangements, evolution towards “Best Equipped/Best Served”, identification of technological tipping points), rather than in isolation.

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The NextGen program is already hitting milestones, has strong US institutional support and is mainly funded by US Department of Transportation.

3.4.1 Candidate funding and financing mechanisms

The implementation of SESAR will generate significant economic and strategic value for Europe as a whole. The benefits expected for the air transport economy amount to 35 billion Euros of cost savings between 2010 and 2025. New technologies developed in the SESAR Programme should also enhance competitiveness of the European industry and generate new employment.

However, SESAR deployment requires total investments exceeding 30 billion Euros3 and the early funding and equipage of SESAR equipment (airborne and land-based) is a major challenge to deliver as soon as possible the performance expected from the implementation of the new technologies.

At the core of the funding and financing mechanism are the SESAR Deployment Packages and associated deployment projects. The notion of Deployment Package is here to provide business coherence between groups of “enablers” (procedures, processes, equipments, etc.) to be implemented together in a given timeframe by relevant ATM stakeholders.

There will frequently be a disconnection between both the timing for investing in equipments/implementations (implementation would typically occur before operational use and therefore benefit realisation) and the returns (the funding, for example fuel savings or ANS cost reduction), both in terms of when and who will get the benefit. Let’s also not forget two distinct elements: • The introduction of the Performance Scheme, which aims at securing cost reductions for Air Navigation Services, but which is going to be very progressive.

• The time profile of disbursements versus expected benefits is in many cases going to be far above the expectations of private investors (in particular for airspace users, where it takes a significant amount of payback time) These examples and others alike clarify some of the induced difficulties to finance SESAR investments. In addition, they will also compete against other short-term European transportation projects, and will require a strong financial risk-taking, which private financial markets do price very high or never offer. This leads to the necessity for public supported “compensation mechanisms”, effectively bridging the gap between funding and financing.

As a result, there is a clear need of organising these compensation mechanisms, with public bodies and private companies strongly linked in some sort of structure, where the global business case is strongly dependent

3

European ATM Master Plan (Edition 1, 30 March 2009), chapter 4.4, table 3

17

on deployment synchronisation and the overall evolution of demand for air transport/traffic (the “risk” factor).

These disconnections between the cashing/timing of benefits, versus the cashing/timing of investments by stakeholder can be reduced but remain unavoidable in a “do nothing scenario”. Therefore and in order to minimise these effects, it is important to re-structure the SESAR deployment sequence around “Deployment Packages”, a level at which both investments and benefits would be identified. While it is easier to forecast the type of investments to be made (how much, when, where, by whom, etc.), it remains complex to reduce the risk associated to realising the benefits in time.

However, some additional sources of income may exist as part of funding, namely grants with no repayments (e.g. TEN-T grants), considering that a significant part of the investments concerns the ATM ground infrastructure.

The optimisation of costs will enable to make margins and generate the expected profits from the system, which become the potential source for funding. At this stage, we consider that each “Deployment Package” (list of packages still being defined) would be ranked differently across several dimensions. At present, the following are being considered: • Coordination complexity, being a proxy for how many actors are concerned and how complex are the links • Implementation complexity, being a proxy for the structures to put in place for implementing, as well as for both the issues to overcome and the sourcing difficulties • Cash complexity, being a proxy for the CBA, individualised at the package level • Financial structure complexity, being a proxy for how large is the discrepancy between financing requirements and benefits These 4 dimensions should, if confirmed, serve as segmenting the packages and will lead to a different type of financing requirements. Indeed, most of these “Deployment Packages” could be seen as independent deployment projects (if funding is well structured, i.e. source of end benefit clarified and mechanisms to pass-through the adequate part to each project), connected to a “SPV (Special Purpose Vehicle)” structure(s) as appropriate. Each project, depending on its cash-flow profile, structure and timing, should be able to have access to some private financing and will in most cases require public support to bridge the gap.

In principle, bearing in mind that the participation of the EU and potentially the EIB would be instrumental in this process to support the deployment of SESAR, the following could be considered as possible sources for financing this gap for SESAR: • Innovation resources, taking into account that SESAR can be considered one of the most innovative projects for transport in line with the EU2020 Initiative. SESAR in fact contributes to sustainable green growth, employment, cost reductions and efficiencies. In the deployment phase, the 18

accessible portion would be around the pre-commercial procurements and public procurements; • Standard EIB loans to bridge the critical time gap between the initial investment and the expected return of investment; • Project financing solutions, frequently used in long-term transport and energy sector projects, whereby private sector financing is made available to finance individual infrastructure projects through commercial banks (project finance loans) and/or the capital markets (project bonds). This could be a useful tool to consider for common (EU level) or regional (FAB) procurement and implementation projects; • Equity or quasi equity from specialised funds such as Marguerite or subordinated debt funds, provided that individual projects or group of projects are structured using some sort of PPP/PF framework; • An equipage fund, which would provide pre-financing capability and remove the last mover advantage; • Other sources (to be explored), such as the EU Cohesion Fund.

At this stage, the order of magnitude of requirements by type of instruments (from Equity to simple guarantee), as well as the initial funds provider (as stated above) and the intermediary management units, are not yet finalised.

However, due to the complexity of the SESAR Programme and the number of stakeholders involved, it is essential that these financing and funding mechanisms are managed and coordinated in a consistent manner to achieve the performance objectives defined in the Master Plan. To this end, new arrangements are needed for the governance of the Deployment phase, to guarantee that coordination mechanisms are effective and any public funding is allocated in an efficient and transparent manner.

Under the new arrangements, there will be the necessity to coordinate a wide spread of different situations of “Deployment Packages”, where basic coordination functions are ensured, but also where some considerable activities might be required.

3.4.2 Available Cost Benefit Analysis for SESAR deployment

Based on the analysis conducted during the SESAR Definition Phase, several stakeholders are expected to realise a positive CBA. In broad terms, these would involve the civil airspace users, ANSPs and Airports. However, there were also a number of airspace users, which were estimated to have a negative cost-benefit profile: • Military and other similar public service related operators; • Business aviation; and • General aviation.

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In light of a significant initial cost of equipment for the Military, the need to access the airspace, civil-military cooperation and interoperability requirements should be addressed beyond purely financial mechanisms in preparing the deployment. Business and General Aviation stakeholders in turn are very fragmented and their business profiles vary from individual aircraft owners, to clearly business oriented operations. These users are unlikely to gain sufficient benefits to offset the costs of avionics equipage for SESAR, due to the nature of their business and their flying patterns.

In such analyses, cash profiles of Deployment Packages would have to be analysed in different sequences: (I) Investments/Expenses to implement, (II) Benefits directly gathered, (III) Benefits passed-through and (IV) Grants obtained. This would lead to a “financing need”, which would be covered by both users’ own investment plans and additions where a SESAR Deployment management body should act to redirect public support.

3.4.3 Need for public funding

Under Section 3.4.1, it was made clear that SESAR deployment would require strong coordination of a large number of individual projects. At present, these projects are planned to be grouped under an understandable and meaningful set of “Deployment Packages”. Each “Deployment Package” is then expected to contribute to enable a determined level of performance (such as reduction of route charges, improved fuel efficiency, CO2 reduction, increased capacity, etc.).

As previously explained, there will frequently be a disconnection between the stakeholders that will capture those performance gains and the ones that perform the investment. This type of complexity and interdependency illustrates the necessity of independently supported “compensation mechanisms” between stakeholders.

Additionally, the timing of the cash disbursements and the cash savings would be quite long and would require critical mass of stakeholders to have all together implemented the required change. In some cases, it would be even more complex as certain business cases could prove to be negative (for example: extended military efficiency is barely seen as a positive cost/benefit item but rather as an increase in military budget). This is the limit of a mechanism where some stakeholders are seen by the “public” and therefore treated as pure cost centres). This notion of unbalanced needs in terms of timing and monetisation of the benefits, as well as the high cost of privately funding risky deployment activities, implies that the “compensation mechanisms” have to get a strong public support, both in terms of funding and governance mechanisms, to ensure the Deployment of SESAR and the achievement of the SES common goals.

Of course, there is no “one size fits all” method and therefore depending on the depth and length of the financing that is easily recovered by benefits or private access to financial markets, the public funding support would additionally have to be put in place and tailored to the portfolio of individual cases (the “Deployment Packages”). Under this environment, the relationship between funding involvement and “Deployment Packages” would be setup for securing risk mitigation: 20

In certain cases, the stakeholders of a given “Deployment Package” would be in an almost self-sustainable situation. This would maybe lead to simple requirements such as Bank Guarantees, in order to reduce financing costs and therefore optimise the cost of deployment In some other cases, the complexity in terms of numbers of stakeholders involved, or technology maturity, or production cost would be so high that a more direct public involvement with loans or mezzanine debt would be required In order for SESAR to be successfully implemented, it would have to secure some form of public funding as being the counterpart for risky “Deployment Packages”. In essence, EU funding is required to “steer” the overall SESAR implementation process and allow/legitimise the necessary EU engagement in the management of a portfolio of SESAR deployment projects. This public support could take different funding formats and would be achieved via different financing vehicles, depending on the “total risk” versus “acceptable market risk” (the difference becomes the “risk spread” to cover). This “risk spread” would have to be financed and its cost would depend on its duration and magnitude. While in many cases Bank Guarantees or Credit enhancements would be sufficient to secure positive net present value for many Deployment Packages, there would still be instances were more direct financing involvement would be required. In that case, participating directly or indirectly via equity would also have to be considered, in addition to pure loans or mezzanine financing.

When analysing different tools, one could consider that for each €1 of public funding, there would be different level of levers in terms of corresponding “market financing” available for a given “Deployment Package”. At this stage and prior to any in-depth analysis, it would be reasonable to believe that the project could achieve a level of “financial market” lever of more than 5-10x the public funding (i.e. the grants into the SESAR Deployment structure and not into the projects per se). Furthermore, it could also be reasonable to expect financial returns of a few percent over the publicly “granted” amount, even if the first 10 years might not yield any returns and be considered as “moratorium years", but that returns would appear after that, on a 20-25 year horizon.

Public funding support should also be used for pre-financing the cost of stakeholder de-synchronisation, providing investment incentives to counter the last mover advantage issue and de-risking the overall SESAR deployment. Similar to all types of public funding support, SESAR would have to prove itself being beneficial for the EU Community. It is therefore forecasted to generate both: (I) direct cash benefits, but as mentioned after a long “moratorium period”; as well as (II) indirect benefits through an expanded overall economy, with potential EU upside of more than 200,000 jobs and €50bn in GDP4. However, without public funding, all these benefits have little chance to materialise in time.

4

According to the impact assessment of the European Commission made before the establishment of the SESAR Joint Undertaking

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All in all, in order to guarantee the implementation of SESAR and realise this strategic EU objective for the creation of the Single European Sky, while also capitalising on the significant R&D capital outlay already provided by the EU, the need for public funding for the deployment of SESAR is absolutely clear.

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4 4.1

ANALYSIS IN SUPPORT TO ASSESSMENT OF POLICY OPTIONS Lessons learned – existing experience 4.1.1 From past deployment exercises

Governance and context factors have affected progress and success of specific previous or recent European & Pan-European programmes.

Over the last two decades, starting with EATCHIP in 1990, a number of European projects have achieved deployment of ATM features, ranging from specific technologies to more general management processes. The experience gained from the first initiatives was used to permanently adapt and improve the approach. The required adaptation to new projects was often substantial and the approach was to be tailored according to different contexts. It is a primary learning that “one size does not fit all” and the complexity of contexts for individual projects requires a tailored response.

Overall, Europe has made significant progress in the ATM field over the past two decades; however it has not progressed as initially planned, showing European ATM’s inability to stick to its change roadmap.

With no change in approach, there is a high risk that SESAR deployment suffers from the same syndrome.

The military experts consider that even if they resulted in network improvement, 8.33 KHz, MODE-S, RVSM and ACAS have impacted the militaries in operational and logistical, as well as financial, terms without providing significant foreseeable added value for them.

Also, an attempt has been made to evaluate the impact of having more or less coordination and synchronisation. It appears paramount that European synchronisation and coordination is reinforced in view of the SESAR deployment challenges that face the European ATM community.

The coordination of European projects by Eurocontrol together with the active support of the stakeholders that had to execute the actual physical deployment locally has been essential in the achievements made and their absence would have made the situation much worse. This is not only the case for some flagship projects like RVSM, but also for current practices and legacy systems, where the day-to-day guidance (partly derived from the experience of other implementers) and tenacious support provided by the Eurocontrol Agency has helped stakeholders to overcome difficulties and move forward.

It must be recalled that the Eurocontrol stakeholders worked under a collective peer pressure approach with red coloured maps for late implementers. This is a positive however obviously insufficient tool to ensure benefits are delivered to the network users on time and within budget.

Having a rule and/or money and a positive business case is not even enough.

Without synchronisation of consistent actions, without maintained focus and 23

commitment, without tailored support (also to airspace users) brought by a technically competent body, the change can not happen. The experience is showing that maintaining all stakeholders in a permanent way in the change picture, while addressing all difficulties in a day-to-day and pragmatic manner is also one of the vital key to success.

The diversity of actors and their diverging interests make it necessary for an impartial arbiter to help define the thin progress line, on which everybody can find its interest. A number of examples illustrate the facts: The governance of IP1 demonstrates the difficulties for a large group of stakeholders to create a suitable deployment instrument by themselves; the LINK TEN-T contract shows how to channel public money towards ATM deployment by airspace users in an equitable way; EAD is an innovative arrangement opening to the unbundling of services with participation of industry; these projects all confirm that one size does not fit all.

4.1.2 From the particular case of IP1

In time, SESAR Implementation Package 1 (IP1), is at the interface between the current fragmented and ageing European ATM system and the future harmonised and state-of-the-art European ATM system able to support the ambitious political goals of the Single European Sky. SESAR IP1 aims at delivering short term and substantial improvements to the current European ATM system while making it more coherent through implementation of best practises, better coordination and the preparation for trajectory and time based operations.

IP1 is to a large extent composed of a number of ongoing activities (some being coordinated by Eurocontrol, such as Link 2000+, CASCADE), efficiency initiatives (Airport CDM, Continuous Descent Approaches), and other programmes, some of which are led by Eurocontrol (DMEAN, PENS).

The first analysis performed by the Group on 14 IP1 Operational Improvements Steps (OIs) shows that 80% of them are either late or not achieved. It is estimated that only 20% of the current content of IP1 is being implemented according to the Master Plan schedule.

To mitigate this risk of IP1 deployment failure, the Single Sky Committee decided in February 2010 to steer IP1 implementation by creating an IP1 Steering Group. Moreover, other instruments have not yet proven totally successful: • for Link 2000+, a SES implementing rule for the implementation of DataLink by 2013 in line with the Eurocontrol data-link programme is still a major challenge for some core ANSPs; • for the same programme, a TEN-T grant (19MEUR) was prepared by the EU to incentivise airline fit, with Eurocontrol support, for the early equipage of aircraft. Only half of the planned amount was claimed by airlines, which were not always attracted by the current TEN-T conditions.

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The critical situation reported on IP1 deployment can be related to a combination of elements such as: • Inappropriate IP1 Deployment Planning: IP1 in its current form was not always aligned to deployment actions by stakeholders; in particular ESSIP processes did not cover the whole scope of IP1. This is being corrected by the SJU Master Plan maintenance work. In addition, the current overall LSSIP monitoring takes place on an annual basis which does not allow the tracking any fine plan adaptations. Moreover, the existing tools for monitoring the deployment phase (EIPR, LSSIP) allow for the re-planning of activities by individual stakeholders, which do not feel under sufficient pressure to respect the deadlines and constraints defined in SESAR plans.

The implementation is an open-loop process without appropriate governance, effective controls and corrective actions and a lack of operational follow up of the initial planning. In summary, the lack of a project management system and authority, through which full consistency could be ensured.

• Ambivalent behaviours from Member States and ANSPs, which can approve in the Eurocontrol forum things that they later do not implement locally as originally planned. Indeed, the lack of constraining enforcement has led some stakeholders to give priority to their own individual objectives, relegating the delivery of network benefits to a secondary status.; • In some cases, the Implementing Rules can be perceived by stakeholders as not bringing real benefits or worse introducing discrepancies in the system (e.g. ADS-B). The experience has shown that regulation alone is not sufficient to ensure consistent and synchronized deployment throughout Europe; • Lack of consideration of the different business plans of the stakeholders which bear the investment costs; in particular, a compelling business case for IP1 has never been built • Last mover advantage: lack of incentives at EU level to accelerate adoption, and increase network benefits.

4.1.3 From PPP governance: the SJU and the changes introduced by the implementation of the SESAR PPP

It is also necessary to consider the complete ATM change cycle that includes Research and Technology Development. Before the existence of SESAR, R&D in Europe was unfocussed, with research organisations performing research for the sake of research, without any implementation targets in mind. The result has been one of the poorest success rates across all domains in the actual implementation of any R&D results and a high level of dispersion of public resources. The linkage of the R&D phase with the Master Plan was an essential element of rationalisation for ATM research, and the starting point for alignment of individual stakeholders’ investment strategies.

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The SJU Public Private Partnership was set-up to manage the development phase of SESAR and is the first of its kind at European level. It has demonstrated a number of benefits such as: • Lean decision making process involving all partners with clear accountabilities defined; • All stakeholders formally engaged in one common programme under a single authority, including oversight and decision making role of Member States through Comitology; • Management of conflicts of interests is ensured with clear governance guidelines; • Budgetary, Financial and Procurement processes governed by EU principles; • Full transparency given to European Court of Auditors and Parliament; • Ability to blend various funding sources (TEN-T, Research) and use most appropriate co-financing level; • Professional and structured programme management based on industry best practices and coupled with contractual arrangements; • EU funding is used to co-finance in-kind contribution from most stakeholders in exchange of control; • Delivery oriented approach with validation activities performed close to the market “deployment oriented”; • R&D activities integrated with Master Planning process including Risk Management; • An ability to prioritise projects according to both top down and bottom-up approaches while taking into account Airspace Users needs; It would be extremely damaging to the aviation community and for SESAR as a whole, to come back to a state of piecemeal R&D, especially in a difficult economic context. Furthermore, experience demonstrates that deployment often triggers new development opportunities; keeping both activities connected through adequate transition mechanisms can bring increased benefits to the development phase.

The real question for SESAR deployment is therefore: “how can we make sure that European plans are actually and effectively implemented?”

4.1.4 Synthesis of lessons learned : the main success and risk factors 4.1.4.1

Success factors

• Clear and sustained commitment of different stakeholders 26

• Project oversight/governance/management adapted to the case • Existence of a demonstrable benefit to large majority of stakeholders • Clear leader in ensuring harmonised and interoperable system upgrades and synchronised deployment • Industry clearly involved in the investment decision making process on what to do and when to do it, followed by permanent monitoring of the deployment progress • Adaptation of the implementation planning to the actual operational circumstances of the providers, industry and airspace users, both civil and military • Gradual deployment strategy, with pioneers, incentives, and appropriate time for product development, standardisation, certification, deployment and optimisation • Working closely with industry and certification authorities, adjusting working arrangements and processes as appropriate.

• Implementation of globally agreed standards 4.1.4.2

Risks factors

• Lack of commercial interest from some stakeholders to invest money and expertise; • Lack of clear business case(s); • Unwillingness from some individual stakeholders to invest for the sake of the broad network benefit when the return on investment in improved performance within their own area would be marginal; • E.g. 8.33 KHz Frequency Spacing and Airport Collaborative Decision Making • No incentives for early equipage upgrade due to inability of European ATM to operate efficiently unless aircraft had similar levels of technical capabilities when operating in the same portion of airspace • Limited ANSPs commitment depending on other priorities and limited local resources • Limited aircraft and airport operators commitment, when associations cannot ensure actions by their members • Lack of proper manufacturing industry involvement • Limited military involvement and commitment from the States

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• Difficulty to synchronise plans (early stopped in 2004) 4.2

Free Routes Airspace Project

The transition from R&D to deployment

Deployment-related decisions need to be anticipated to the greatest extent in the R&D phase. There should be interaction between deployment and development of technology. In particular the complexity of investment decision and planning must be anticipated.

While there is a logical continuum for a particular idea from conception to operations, the main actors involved in R&D are not always those in charge of implementation and operations, even within the same company. And the funding conditions are not the same. Hence, pre-industrialised developments (V3) should not be totally redeveloped (e.g. programmed again) for industrialisation.

Deployment plans have to be developed involving the different deployment stakeholders in an enhanced process securing appropriate link with - and adjustment of - the ATM Master plan.

SESAR deployment requires a number of different production, certification, equipment installation, funding) synchronised manner. Therefore, careful and realistic ordination and stakeholder commitment are essential for a of Operational Improvements.

activities (validation, to be completed in a planning, proper cosuccessful deployment

As underlined in the Master Plan, change needs to be properly managed and communication and training to ensure staff buy-in and readiness have a particular importance: the deployment of SESAR may change work environment and working conditions of all staff involved in aircraft, ATM and airport operations.

The training of personnel (ground and air) itself constitutes one of the relevant enablers when planning and executing deployment. The envisaged evolution towards a more integrated ATM introduces even needs such as that to go for a civil recognized military licence 4.2.1 Validation

The nature of R&D and validation are formalised through steps well recognised by both manufacturing and service industry as well as the community dealing with research and development. Concept and Technology readiness levels, equivalent to maturity steps are well identified and mark the main milestones and decision times. This approach can be applied throughout the scope and lifecycles of ATM. Development results have to be linked to deployment packages, deployment acceptability of which has to be matured progressively through the development of overall business cases and optimisation of deployment scenarios and associated plans.

Therefore, the transition to deployment starts with the end of the validation which is a formal milestone in the development phase.

Safety, ATM systems security, human factors and environment issues, requirements and costs need to be integrated in the business cases as well as in the validation processes.

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However, according to the maturity steps there is in every operational ATM environment the need to perform operational verification and validation before deployment can be approved, e.g. for the products through integration actions when they become available, based on the actual standards, themselves suitably validated. Finally, the validation of the overall concept needs integration tests and a comprehensive range of test conditions depending on the specific environment for deployment. These tests or validations will go beyond those performed prior to the deployment decision.

In all cases for a deployment decision can be taken, the validation of concepts, technologies, procedures etc. has to be complemented by a formal certification by the NSA or EASA in particular for procedures, products, components, systems and airborne installations / applications.

4.2.2 Standards

As far as the development of the technical standards is concerned, SESAR is directly competing with the United States’ NextGen programme, which is publicly supported by President Obama, is run by a single agency (the Federal Aviation Authority) and has recently received the required public funding. Having to rely on US rather than our own European standards could lead to a delay in adoption of the new ATM systems or to some European requirements not being adequately met, and put the EU’s leadership and competitiveness of its high-tech industries at risk. Additional regional programmes similar to NextGen and SESAR are under preparation and will become soon competitors.

In addition to materialising a shared set of requirements and knowledge to enable interoperability, standards are needed to build industry's confidence into a new technology/new ATM market. The standards are also a key input to the certification process, which has to be based on performance of the equipment and not on the equipment itself. With this approach it would be much easier and less costly to integrate the military, as their equipment might provide an equivalent level of performance, and the production of standards would be enhanced if civil and military standards were harmonized at the earliest opportunity.

Critical to all deployments, wide industry standards need to be timely available for interoperable products to be produced by industry, verified through integration tests and certified by EASA/authorities5, and again, should focus where possible on equivalent levels of performance, in particular for the military.

A number of the results produced by R&D shall be presented in a format that makes them directly usable for producing the standards.

Therefore the planning and synchronisation functions for the governance of the deployment must ensure timely availability of standards (standardisation

5

With regard to safety relevant and safety critical systems and constituents, the respective EASA rulemaking is pending

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roadmap of the Master plan, EU-US cooperation on interoperability, ICAO, Eurocae and RTCA).

It is stressed that industry itself has an essential role to play in the development of technical specifications embedded in the standards.

Similarly, military procurement agencies and EDA need to be involved so that programmes anticipate on the coming ATM requirements.

4.2.3 Large scale production, market developments and fair competition

Large scale production is one of the activities that take place during deployment, but it was considered that it was outside the scope of the Task Force (i.e. in terms of governance and funding as it remains totally a prerogative of manufacturing industry. Nevertheless, it is discussed below only as a prerequisite to be ensured and a key element to be considered for realistic planning.

The development phase of SESAR will deliver validated technologies and procedures together with the necessary material to develop standards. They will be grouped into consistent packages to ease their implementation by stakeholders. Although any supplier could market these technologies, it is anticipated that, at least for complex systems, only a limited number of alternative solutions will appear on the market and be made available for implementation.

Products can be self funded and prepared by industry and integrators only when there is a clear market perspective offering clear return on investment for them (role of standards). Alternatively, product development could be funded, but this is not using the industry natural market mechanisms and this would need to be reserved for very specific cases. For each significant ATM component, it is necessary to verify the product market dynamics is there before deployment can be planned successfully.

It is an advantage that product standardisation occurs, allowing interoperability and inter-changeability, but also and more importantly competition between all suppliers (including the ones who are not SJU members) and economies for product customers.

When planning, realistic estimates of the time to market after R&D: industrialisation, production and delivery/installation should be taken into consideration with the advice of manufacturing industry.

Standardisation with common specification resulting from SESAR will allow industry to build compliant products. These products need to become available to serve identified open markets, which is a condition to attract a number of industry players into a fair competition. Alternatively, common wide scale procurement can take place allowing one or two supplies to be selected. It is then likely that any subsequent market will attract a limited number of other suppliers.

If different mechanisms are used in different regions regarding the funding or provision of equipment (such as leasing, common procurement, etc), there 30

may be significant undesired effects that distort the market and competition for both the providers and the customers of equipment.

4.2.4 Certification

SESAR deployment, whether airborne or ground and space based, must be certified before entry into service. Under the current and foreseeable future regulatory frameworks, airborne and ground/space based aspects need to be simultaneously addressed.

The foreseen role for the EDA within the Military Airworthiness Authorities (MAWA) aeronautical certification processes with respect to SESAR deployment (possible interactions with EASA) has to be clarified by MS. Further work is required before delivering a mandate to this Agency.

The top level applicable framework is the one of ICAO, directly or indirectly.

4.2.4.1

Airborne segment

The applicable regulatory frameworks are the airworthiness (“initial” EASA remit) and operational frameworks (“first” extension), as defined by basic regulation CE 216/2008 and related implementing rules. The following need to be addressed: Airworthiness approval of the design of the airborne segment by EASA This is performed in the frame of implementing rule CE 1702/2003.

Depending on the nature of the implementation, the specific design approval for a given system part of the SESAR deployment may be included the aircraft type certificate (TC), or be separate in the form of a major design change (for TC holders) or a supplemental type certificate (STC), for other applicants. The design approval is granted when the system complies with a general statistical safety approach (e.g. CS25.1309) and with the applicable “certification specifications”. Those are “soft” law and can be industrial standards or even dedicated technical specifications, adopted by the Agency after a public consultation process.

TC and STC applicants should demonstrate their capability and hold a design organization approval certificate issued by the Agency. The majority of European actors in the field already hold this certificate.

Manufacturing and maintenance approvals The regulatory framework is defined respectively by CE1702/2003 and CE 2042/2003 and does not raise any particular difficulty.

Operational evaluation and approval This covers the operational aspects linked to a specific system, or may be stand-alone if the novelty only bears on operational aspects. It will comprise an operational evaluation by EASA (“operational suitability data” concept) which will be the basis for the operational approvals granted by the member States. Although the regulatory framework is not yet fully defined, no 31

particular difficulties are expected for airborne systems part of SESAR deployment.

Continuous safety monitoring This is mainly defined by CE 1702/2003. No modifications in the reporting scheme are expected. Airborne operators (e.g. airline operators) must report in service occurrences to the design approval holder (type certificate or supplemental type certificate holder) which is responsible for the collection, analysis and further reporting the the Agency. When an unsafe condition is found, the Agency must take mandatory action to correct this unsafe condition.

4.2.4.2

Ground or space based segments

The present regulatory framework is that of ICAO and SES. It is presently being adapted to the EASA framework. This adaptation takes place in several steps, including a “fast-track” change of present SES rules to the EASA framework (first step) and the drafting of a new consistent set of rules (second step). In all cases, compatibility will be preserved between the existing and the new rules. As a consequence, it is possible to describe the main elements of certification according to the foreseeable regulatory framework. The following needs to be addressed: Ground operator approval Ground operators of the system will need to be approved, as they currently are under CE 2096/2005. This is essentially an organisational approval requiring defined management and safety management systems. These approvals are granted by the “competent Authority”, i.e. the local national supervisory Authority (NSA) or, when bearing on a pan-European ATM /ANS service operator, the EASA. System safety case The safety of the system also needs to be demonstrated. As a difference with airworthiness where the safety is assessed in absolute terms, in the ATM world, safety is assessed when “systems” are being changed. In practice a “safety case” needs to be produced and approved by the competent Authority to demonstrate that a new system does not degrade the safety level below that of the system it replaces, or below the level of a comparable system in use elsewhere. The Agency has presently launched a regulatory task to define those “differential” safety assessments Software deserves a special mention because it cannot be assessed after it has been developed. Its safety is only addressed by means of the stringency of its development methodology. Several equivalent standards for this exist. They all share in common that the appropriate “software design assurance level” must be specified and ensured before the development of the software starts.

It is important to note that the concept of operations for the new system must be defined because otherwise it is not possible to identify the “reference” 32

system for the differential safety case, nor the “feared events” for the safety analysis methods.

Interoperability Compliance with ICAO standards and recommended practices (SARPS) is a key element to achieve interoperability between the airborne, ground and space segments, worldwide.

Where applicable, the interoperability of the system must be addressed according to CE regulation 552/2004. This is essentially a declarative process: • a “declaration of conformity” is provided by the provider of the system, • a “declaration of verification of the system” is provided by the operator of the system.

If concepts of operation and industrial standards are provided early in the design process, this should not pose any particular problem.

Approval of ATM procedures ATM procedures, when impacted by SESAR, need to be approved by the concerned NSA. Funding The funding of these activities is presently not defined in the fees and charges Regulations which would need an urgent, but minimal, adaptation to cover this aspect. It is also noteworthy that the Agency may be assisted in this task

by Eurocontrol Directorate Single Sky (DSS) in the frame of the newly concluded memorandum of understanding between the two bodies.

4.2.4.3

Conclusion on the certification aspects of the deployment of SESAR

The certification of the airborne segment of the SESAR projects to be deployed raises no particular issue, provided that it is initiated in due time and that appropriate industrial standards or certification specification exist. In particular, applicants should timely apply to their competent authority.

Although the regulatory framework for the certification of the ground or space segments of the SESAR projects to be deployed is presently evolving, there are no show stoppers. The concept of operation for the packages must however be very well defined from the beginning and the Agency (or NSA) must be involved in a very timely manner. EASA and SJU have concluded an agreement which will secure early involvement of EASA in the development aspects. The fees and charges Regulation to ensure the funding of the involvement of the Agency also need to be adapted.

Although in different regulatory frameworks, the certification related aspects of SESAR do not raise particular difficulties. The following recommendations apply: 33

• early definition of the concept of operations, • early proposal of possible industrial standards, to be used for airworthiness certification and for interoperability declarations and assessments, • early involvement of the certification bodies (EASA for airworthiness and pan-European ATM/ANS service providers, NSA for national ATM /ANS and airport service providers), • adaptation of the EASA fees and charges regulation to ensure the funding of EASA when performing ATM /ANS related certification activities, • general support to the EASA rulemaking adaptation process to integrate the SES rules into the EASA framework in a seamless manner.

4.3

SES framework 4.3.1 Generalities

The SES framework is already rich of very important features supporting the realisation of the Single European Sky. In particular through the notion of interoperability implementing rules, means of compliance, but also the performance scheme, the common charging scheme and the network manager functions. These ingredients are however recent and their use has not yet reached full maturity and integration of their application. For example, it is important to reinforce the link between performance and deployment planning.

The experience also has shown the need for more flexible funding mechanisms, better adapted to the characteristics of the aviation supply chain.

4.3.2 Use of existing SES instruments 4.3.2.1

Relevant SES Implementing Rules

Interoperability Implementing Rules (IR) are necessary (but not selfsufficient) instruments to enforce the achievement (Full Operational Capability), harmonisation or interoperability of specific components, functions or procedures. They should be proportionate, etc., i.e. targeted to the topics where they add value compared to the “natural trend” of harmonisation and implementation. However, neither IR does not provide for upfront synchronisation and coordination, nor for funding. In addition, Commission's oversight of Member States compliance to regulations and (financial) consequences in case of non compliance remain unclear.

The performance targets provide the quantified objectives for the ANSPs to trigger the necessary investment into new SES technologies and procedures to meet the increasing performance requirements. In particular, the PRB will monitor the performance. It could be anticipated that there will be a growing connection between the timely achievement of the required performance levels by all stakeholders and the timely deployment of SES technologies and procedures.

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The concept of Common projects, contained in the service provision and the charging Regulation, provides a useful solution to support the deployment of large scale, cross-border projects impacting the performance of the network, including some of the military aspects. This concept allows tailor made governance and financing schemes.

The charging regime could be used to help accelerate the deployment of SESAR provided that charges are calculated taking different levels of capability into consideration and removes the "last mover" advantage.

The Network Manager IR allocates three main functions to the Network Manager (art. 3.4 and 3.5): • The design of the European Route Network; • The coordination of scarce resources, in particular radio frequencies and SSR transponder codes; and • ATFM. The IR also provides for the allocation of additional functions to the Network Manager (art. 3.4).

To support the execution of the above functions, the Network Manager shall perform a wide range of tasks aiming at network performance and including planning, operational activities as well as defining network performance improvements and supporting deployments accordingly (art. 4). The Network Manager is entitled with a degree of responsibility to take necessary actions to ensure that network performance targets are met. The Network Manager has a governance scheme where industry plays the major role.

Functional Airspace Blocks should play an important role in SESAR deployment and should consequently develop their deployment coordination and working arrangements, and be integrated in the SESAR deployment process. Close civil-military coordination in all domains shall provide for better coordination and synchronisation.

4.3.2.2

TEN Funding

There is a need for TEN infrastructure programme to incentivise deployment, however in a more flexible way than the current TEN (fixed 20% grants with heavy admin conditions).

Common projects funded under the TEN-T programme should carefully consider civil-military cooperation as an essential element to address as a benefit to aviation.

4.3.2.3

ESSIP/LSSIP

The ESSIP/LSSIP process must be leveraged in the enhanced planning and monitoring processes that have to be implemented in part by SJU’s Work Package C. 35

4.3.3 Need for additional instruments / need for adaptation of existing instruments

The overall scheme in place provides a suitable general framework that can be complemented by new or modified instruments focused on: • Proportionality: The engagement of the EU should be adapted to the nature of the project to be implemented; • Improving decision making (wide consultation through coordination forum with all stakeholders involved before decision vs. commitment of stakeholders to implement decisions when taken); • Transparent, impartial and efficient use of available funds (public or private) However public funds to cover upfront costs for modernisation of military systems, if made available, could follow different decision making lines under independent planning processes; • Ensuring a greater level of alignment of the regulatory and standardisation roadmaps to support the execution of the Master Plan; • Leverage the ESSIP/LSSIP mechanism when defining the enhanced deployment planning and monitoring processes that have to be implemented in part by SJU’s Work Package C; • Ensuring that, at a certain point in time, deployment plans have a contractual base: date suggested/defined/negotiated by stakeholder, but once agreed it’s binding (it would be worth investigating the possibility to sanction lack of progress or compliance, although sanctions to a State for delays on implementing SESAR in the militaries are likely neither acceptable nor suggestible, unless a total commitment has been announced by that State); • Report on deployment delays and reasons for that, in a way that gives an actual picture; • Clearly link the deployment plans with improvements in performance supporting the achievement of the targets defined in the Master Plan and translated at a certain point in time into binding Performance Targets as part of the Performance Scheme.

4.4

Financing, funding and costs benefits analysis

The implementation of SESAR will generate significant economic and strategic value for Europe as a whole. Without an effective allocation of EU resources to support SESAR it is unlikely that the programme will succeed resulting in a potential opportunity cost for the EU economy of 200,000 jobs as well as 50 billion € loss on EU GDP6.

6

According to the impact assessment of the European Commission made before the establishment of the SESAR Joint Undertaking

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Difficulties in SESAR deployment financing result from the partial disconnection between investments and benefits during the transition phase: an airline investing in a new airborne equipage will not see any benefit before the Air Navigation Service Providers have made the corresponding investment. On the other hand, for an ANSP, the business case may not become positive until a significant number of aircraft are equipped. Finally, there may be some changes with an overall network benefit and positive business case but requiring some stakeholders to invest whilst this will remain a net cost for them. In this case funding should be made available.

As a result, operators are inclined to adopt a reactive rather than a proactive stance (last mover advantage). Therefore, funds made available by the EU for supporting deployment will be used to govern a synchronized and rapid adoption of the SESAR technology by the operators (airspace users, airports, air navigation service providers). Furthermore, in order to ensure the continued investments in R&D and Innovation, additional funds in line with those available for the current R&D phase would be needed for the future period 2014 – 2020 in the ATM field.

To achieve the pace necessary to meet the ATM performance targets, it is estimated that SESAR deployment would require around € 3.0 billion of EU funds7, that would be leveraged combining different financial facilities at the moment under discussion, such as own resources from industry, project financing solutions (loans or project bonds), guarantees, loans from commercial banks and the EIB, for the period between 2014 and 2020. This required allocation of funds is consistent with previous estimates and represents approximately one third of the implementation costs for the period 2014-2020, the two remaining thirds, as was done during the SESAR development phase, are being borne by the industrial partners and the airlines. Without an effective allocation of EU resources to support SESAR, a potential opportunity cost for the EU economy which is significantly greater than the cost of public funding risk to be missed. This is different from the US where the development and deployment of next generation ATM technology relies mainly on public funding.

Although it is widely recognised that the vast majority of investments in SESAR will be made by the private investors, the risk during the transition phase can be diminished by appropriate use of EU resources and instruments that would be leveraged, where appropriate with financial instruments from the private sector (not developed here), in a structured and scalable financing vehicle: • Use of dedicated EU funds: – Co-financing: ground infrastructure investments of ANSPs and airports to synchronize Deployment Plans, very much like the R&D working arrangements. The possibility of using such funds to co-finance airborne infrastructure investments would need to be carefully reviewed, notably in the light of WTO constraints (see also “TEN-T grants below”).

7

Based on initial estimates, considering the leverage effect to cover the total estimated investment excluding the military costs.

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– Pre-financing: ground and airborne investments during the transition phase (possibly linked to a fund arrangement, see below).

• TEN-T grants, considering that an important part of the investment concern the ATM ground infrastructure and the introduction of innovations; • Innovation resources, taking into account that SESAR can be considered one of the most innovative projects for transport in line with the EU2020 Initiative.

SESAR in fact contributes to sustainable green growth, employment, cost reductions and efficiencies; • The route charges mechanism and in particular within this framework, the “common projects” process which, under SES comitology, enables direct access to route charges for common projects; • The ETS in accordance with recital 7 of SES II: “Member States should be free to decide how revenues generated by the auctioning of aviation sector allowances under the Emission Trading Scheme are to be used and to consider in this context whether a share of such revenues might be used to finance common projects at the level of functional airspace blocks”.

In the framework of Work Package C, a detailed feasibility of a financial structure such as an equipage fund, which would provide pre-financing capability to relevant stakeholders (in particular airspace users) during the transition phase and remove the last mover advantage will be defined and validated in 2011. Such a financial structure would leverage the capabilities of the EU and also help address the demand and technology risks associated to the implementation of SESAR. It is essential that these funding and financing mechanisms are developed and managed in a consistent and structured manner, in order to support the implementation of the Master Plan. To this end, new arrangements are needed for the governance of the Deployment phase to guarantee that coordination mechanisms are effective and any public funding is allocated in an efficient and transparent manner.

4.5

Pan European dimension

The governance and funding schemes should describe the provisions for accessing Countries as well as how far the governance and funding mechanisms could apply to non EU States and/or be extended gradually to the rest of geographical Europe.

In particular, incentive mechanisms would benefit all Pan European players instead of only EU 27.

Pan European aspects need to be taken into account when synchronising plans; this does not always mean that all need to implement at the very same time.

Deployment need to be facilitated Europe wide. In addressing these issues, a particular attention should be paid to the possible impact of discontinuities at the boundary of the participating area (whatever its definition), which can penalise its peripheral zones and require additional coordinated actions with external areas As for today the military focal point for all pan-European ATM matters, the MAB could be used to provide military-military harmonised positions and ways-forward 38

regarding SESAR deployment. SESAR not being only affecting military ATM, there is a need to coordinate relevant matters of SESAR with all the other international military organisations (NATO and EU bodies) represented in Europe with a member States’ mandate as required.

4.6

International cooperation

Commonality in function and specification is an absolute must on all aspects where interoperability and seamlessness is at stake, primarily concerning avionics, information exchanges (both air-ground and ground-ground) and procedures. This can only be achieved through cooperation between Europe and the US but also with other regions such as Asia, and more generally with ICAO. It must be recognised that synchronisation of plans and of their execution will remain a difficult subject due to in particular different operational needs, different enforcement mechanisms and different starting points. However, efforts should be made to build the necessary political will and mechanisms found to exercise peer pressure so that plans can be aligned as much as possible.

It is important that there is significant cooperation and coordination with NextGen and other major ATM programmes to ensure compatibility and also sharing of knowledge and research to reduce the time to market and cost.

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5

ASSESSMENT The Expert Group assessed the three governance options proposed in the Commission Staff’s Paper. The assessment is based on the different elements presented in the previous section of this report.

Following the currents development in the Task Force's discussions, the experts group assessment is applicable to the first 2 layers of governance model, i.e. the political/institutional and the programme management. With regard to the third layer, different arrangements can be considered for the deployment at project level including adhoc PPPs, consortia, joint ventures, etc. which have not been assessed and are considered mostly in the hands of industry.

5.1

Methodology

In order to perform the assessment, the experts agreed on a grid containing the main assessment criteria in line with Section 3.3 of this report. In particular, the assessment focused on: • Attributes of governance (independence, accountability, representation & participation, decision recognition, timing for set up, structural costs, link with R&D); • Core governance functions (planning, coordination, monitoring, financial management, enforcement).

The process for the assessment included an initial “individual” assessment which was provided to the Secretariat by 9 March 2011 with contributions from the Eurocontrol, ANSPs, Airports, civil airspace users, Military and SJU experts.

These contributions were examined by a plenary session of the EG on 10 March and submitted to the Task Force at its meeting of 17 March 2011, where in addition to the aforementioned contributions, some comments were also formulated by EIB and EASA experts.

5.1.1 Governance options for assessment

The three options assessed by the EG, in accordance with the Commission Staff Working Paper, are the following: 5.1.1.1

Option 1 - High level steering through existing SES framework

This is the baseline option in which, through the existing SES regulatory instruments and mechanisms, the Commission drives the deployment with new Implementing Rules and Community Specifications, to ensure the timely achievement of key milestones by the relevant stakeholders and avoid compromising the subsequent deployment steps. In this scenario, the responsibility for funding and executing SESAR deployment lies fully with users and service providers. The Commission, although publically responsible for the implementation of the Single European Sky, exercises a regulatory oversight function.

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5.1.1.2

Option 2 - Designation of the "Network Manager"

Building on option 1, the Commission could propose to extend the role of the Network Manager to take the responsibility for managing, with the relevant stakeholders, the execution of SESAR Deployment.

5.1.1.3

Option 3 - Establishment of a European partnership

Also building on option 1, the responsibility for managing the execution of SESAR Deployment could be entrusted to a European public-private partnership, involving the relevant stakeholders. The Commission would have a leading role in its setup building on the experience of the SJU but would rely on the industry to implement.

5.1.2 Assessment framework, criteria and detailed results

In assessing the different options, the experts tried to consider the additional aspects needed to implement each of them. In particular, for option 2 and 3 some assumptions were made based on current experience and knowledge, on the possibility to implement them considering that for both of them further refinement of the concrete reference framework is still required.

Finally, the assessment of the three options was performed taking into account the overall 10 general principles detailed in the aforementioned paper.

The assessment framework and criteria, as well, the detailed results are included in Annexe 4 to this report.

5.2

The Assessment results overview 5.2.1 General remarks 5.2.1.1

By ANSPs, airports and civil airspace users communities

The deployment planning function (i.e. namely European ATM Master Plan maintenance and update) should be led by a body in which institutions have a majority weight, as this is the tool through which all the stakeholders and shareholders can feel confident both industrial and societal expectations regarding the system and its performance targets will be met. It is within this function that the network priority projects should be approved and it is therefore natural that States, through the appropriate European bodies, should have the final say in this matter.

The new governance structure (focused on optimised synchronisation of investment plans and implementation activities associated to the network priority projects identified in the planning function) should be led by the major investors as executive managing partners. Contrarily to the institutionally led R&D, the deployment execution functions /activities should be under industrial leadership by the major investors as the operators.

The new governance structure should be setup in such a manner that attracts financial and funding instruments for the governance itself AND to enable 41

the timely delivery of the optimum benefits. This financial support will be the leverage to achieve successful implementation of SESAR, and EU citizen benefits, and “binding commitment” of the Major Investors with the need for expensive regulation as a last resort only.

5.2.1.2

By EASA

None of the options alone is optimum to fulfil the SESAR Deployment Programme Management.

5.2.1.3

By the Military

Neither Option 1, 2 or 3 will work on its own; there must be a mixture of the 3 Options to ensure the efficient management, supervision and execution of the Deployment Phase at strategic, operational and tactical level.

For that reason, the military community favours a mix of responsibilities through Options 1 to 3, provided a clear assignment of roles and areas of accountability with well defined reporting lines and connections with the Nations would be established; however, only under the condition that the decision authority rests with Option 1 (European Union through Single Sky Committee).

If Option 3 will be implemented, military participation as a stakeholder needs to be considered at the appropriate level.

With regard to the funding for deploying the SESAR military component, military experts have expressed strong concern over the issue. Currently, there is no clarity on how to cover the significant amount (more than 7B€) indicated as the costs required to suitably equip the military fleet and ground systems for SES. The Military community, while urging the need for a more detailed Cost-Benefit analysis, requires that the Task Force, in passing its recommendations to the Commission, invites the Commission to stress this important point in its proposal to the Council.

5.2.2 Option 1 - High level steering through existing SES framework

As indicated in the Commission Staff Working Paper, this is the baseline option in which, through the existing SES instruments and mechanisms, the Commission drives the deployment with new Implementing Rules and Community Specifications.

The experts considered this option as the “do nothing”, i.e. no ad hoc deployment execution governance and funding solution would be developed.

The experts reached consensus on the fact that this option will have the advantage of a strong “institutional/political” level but it will substantially lack: • The involvement of industry; • The alignment of investment decisions; 42

• The participation of those requested to sustain the investment costs in the decision making process; • The connection between the high level deployment planning at the tactical level, possibly with the exception of the Network Manager.

It appears from the elements brought forward by the experts, that Option 1, while it does not add direct costs to deployment, carries the same risks of default of IP1 (and previous critical ATM projects), where critical delays are present and cost benefit opportunities are lost (in accordance with the European ATM Master Plan, for IP 1 in the terms of 0.7 to 1.1 BEUR per year of missed opportunities for cost reductions in front to investment already realized by most of the airspace users).

Nevertheless, the experts agreed that high-level steering through existing SES framework is essential for any other option under analysis, being the instrument which ensures oversight of the MS and the Institutional/Political level.

5.2.3 Option 2 - Designation of the "Network Manager"

The assessment of this option resulted in two main different appreciations of the suitability of the extended “Network Manager” to have the attributes and perform the functions for the governance of the SESAR Deployment.

5.2.3.1

Position A

Position A in the assessment grid, is sustained by ANSPs, the Airports, the civil airspace users communities and the SJU experts which considered the “Network Manager” not suitable alone for the SESAR Deployment Programme Management although it is recognized that it has a clear role to play in connection to its core functions of service provider responsible for the network performance.

The experts expressed the view that by its nature, the Network Manager does not fulfil the main conditions to perform adequate programme management.

Furthermore, the experts considered that the lack of separation of the functions of programme management and service provision implies the risks of conflict of interest and lack of independence e(the Network Manager being only “one of the actors” included in the SESAR Deployment Plan). It was considered that having the Network Manager in charge of the governance of the deployment will dilute the accountability needed in the decision making process, it will limit the steering of the investors and stakeholders, it will have a limited capacity for the buy in of the deployment strategy, it will carry the high direct and overheads costs related to its legacy. In summary, the experts of ANSPs, Airports and SJU considered that having the Network Manager alone in this role would not bring in most of the cases any added value to option 1, but in some specific limited areas of competence. Finally, at this stage the fact that the Network Manager will be within the legacy framework of Eurocontrol carries the risk of a decision making process 43

subject to the PC unanimity which risks to limit the real possibilities of the industry steering.

5.2.3.2

Position B

Position B, according to Eurocontrol experts, allows for the coordination and synchronisation to take place, building on existing capabilities and knowledge, with the understanding that it should allow for local or industry initiatives, as local deployment remains a substantial part of the Strategy.

This option would be particularly suited to address network issues and coordination requirements, and would provide the overall framework within which the local/FAB actions can fit to deliver the performance targets. It was felt that Option 2 would be compatible with specific deployment projects as necessary, either FAB level initiatives, ANSP product rationalisations, or specific PPPs. It could can facilitate an impartial access to funding, and in particular, can activate and facilitate agreements on common projects, and on incentive schemes, operational incentives (e.g. best equipped / best served) as well as financial incentives (e.g. route charges modulation).

The Network Manager cooperative governance led by operational stakeholders and in particular by the industry partners, would make it suitable for prioritisation of actions (taking operational actors’ reality into account), for the management of common projects (incl. use of common funding), but not for all projects, especially when they concern local or industry developments. Finally, this option could well take care of deployment planning aspects; the formal extension of the current role of Network Manager could be accompanied by planning mechanisms focused on deployment and fully interrelated to the MP update process.

No convergence was reached by the different experts.

5.2.4 Option 3 – “Establishment of a European partnership”

As per the previous option, the assessment of this option resulted in two main different appreciations of the suitability of the PPP to have the attributes and perform the functions of the SESAR Deployment Programme Management.

5.2.4.1

Position A

Position A in the assessment grid, sustained by the ANSPs, the Airports, the civil airspace users and the SJU experts which considered the “PPP” the most suitable vehicle for the SESAR Deployment , although it is recognized that the aspects such as leadership, governance processes, etc will need further examination when detailing its design The key element of the position expressed by these experts consists in the recognition of the need of a specific vehicle in charge of the Programme Management of the SESAR Deployment, where to integrate and perform the key functions of Programme Management such as planning, synchronization of deployment plans, deployment support and coordination, deployment monitoring and reporting, management of the risks and coordination of the implementation of the mitigating actions, coordination of the funding and 44

financial resources, establishment of implementation agreement for the deployment. It was recognized by the experts that the PPP is the most appropriate vehicle to leverage EU funds/capabilities with the private sector and ensure the achievement of the SESAR deployment providing the necessary entity for the involvement and steering of the public and private investors, the adequate accountability, the intrinsic recognition of the decision with the possible commitment of its members to ensure the buy-in by those not directly interested to commit in the PPP, the appropriate framework were to have the key participation of the Network Manager, the strong link with R&D. Furthermore, the establishment of the PPP at in the legal Framework of the Community would ensure, and not dilute, the necessary Institutional and Political oversight of the MS and the EP, the most appropriate independence and management of conflict of interest, the most adequate level for the maintenance, together with the membership, of International relations, some fiscal benefits and, where made available, the sound financial management of EU own resources under the oversight of the European Court of Auditors and OLAF. The scope of activities to be overlooked by this PPP should be focused on those which bring benefits for the air transport community, while the support and coordination at regional or local level should be subject to ad hoc agreements.

The ANSP, airports and civil airspace users communities support a PPP arrangement in the understanding that: It provides the flexibility to accommodate the strengths of both scenarios 1 & 2, i.e. EU legislation providing the Framework for the PPP, participation of the States – represented through the Commission - and Network Manager to the PPP and close working connection with SJU to feedback into planning function.

It provides the means to overcome the current main weakness within the deployment area through the provision of the essential mechanism for achieving commitment from the operators / industry by putting them in the driving seat and making them accountable for the results.

It best covers all the requirements for successful and speedy implementation of SESAR products and SES objectives In summary, a PPP would provides the means to overcome the current main weaknesses within the deployment area through the provision of mechanism to achieve commitment from the Deployment investors by making them accountable for the results and having them as key actors in the decision making process.

5.2.4.2

Position B

Position B, supported by the Eurocontrol experts who assessed low/medium a number of the criteria, primarily based on the lack of clarity on the set-up.

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In terms of actual “deployment execution”, a single PPP would have to be limited in scope not to play against the need for subsidiarity and not to translate into inefficiency regarding the projects that can be done at local initiative.

The membership of “relevant” stakeholders would lead to either a very wide participation or a dilution of individual control and responsibilities, or to a limited participation to a few players which, whatever the selection process, would be seen as potentially “controlling” investments of others and being in conflict of interest.

Another challenge is the difficulty to address the airspace user population due to its diversity (considering also EU based or not). By definition a PPP implies a contribution of the private sector. It is not clear what the members of the PPP would bring in relation to their deployment investments. Finally its impact on the market and on competition as well as on individual initiative would have to be seriously considered.

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6

CONCLUSIONS8

The Expert Groups converged on the following main conclusions: • There is a need to move from the current distinctions of the three aforementioned options to concentrate on the governance and functions aspects of the SESAR Deployment Programme Management; • The “High level steering through existing SES framework” is the basis for the governance at a political/institutional level for SESAR deployment. However, even expanded, it can not be considered alone an effective scenario to ensure SESAR deployment; • The “Network Manager” is a key player in the SESAR deployment being responsible at the end for the day-to-day network performance at technical and operational level. However, even expanded, it cannot be considered alone as sufficiently effective scenario to ensure SESAR deployment; • There is a preference to define and establish a “Programme Management” entity or vehicle which shall be able to address the following: – Synchronization of deployment plans, deployment support and coordination, deployment monitoring and reporting, management of the risks and coordination of the implementation of the mitigating actions, coordination of the funding and financial resources, establishment of implementation agreement for the deployment; – The driving and commitment of the industry, in particular the Airspace Users, ANSPs, the Network Manager, Airports and the Institutional level (for the necessary independence, oversight and enforcement) in order to perform the aforementioned functions Each role and responsibility shall be clearly defined; – The governance mechanism of this vehicle shall be formalized in a legally binding framework, where the participant members directly integrating this mechanism shall commit to invest, deliver and contribute to the buy-in by those who are not directly participating (cascading model); – Consideration should be given to establish the vehicle as an EU body in order to ensure the necessary Institutional/political oversight by the Member States, the European Parliament, including the European Court of Auditors and any relevant body, to benefit of tax exemption, leverage EU capabilities for funding and financing, to have the necessary positioning in the International environment for discussing interoperability aspects and other relevant relations for the SESAR Deployment; – The Programme Management vehicle should be provided with the adequate tools to support the deployment of those packages that bring

8

Proposal by the Experts Group for consideration by the Task Force.

47

benefits for the overall Air Transport community, providing ad hoc support for the regional and local level when requested or needed; – The Programme Management vehicle should be in the position, where appropriate, to distribute resources through public procurement procedures to execute projects.

– The formal link with the responsibility to execute the Master Plan, including Risk Management, is maintained.

• That projects for the deployment of specific features/changes should also consider making use of innovative arrangements, including of a PPP nature, to ensure their most effective implementation • That there is a need to further define the scope of the "SESAR deployment Programme" to be the subject of the governance and/or management of deployment, in particular in the context of the subsidiarity principle and the responsibilities conferred to different actors by the SES regulations.

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LIST OF ANNEXES

ANNEX 1: Terms of reference of the Task Force ANNEX 2: Participants ANNEX 3: Working schedule ANNEX 4: Assessment grid

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ANNEX 1: Terms of reference of the Task Force In the Commission Staff Working Paper: "Preparing a deployment strategy for the Single European Sky (SES) technological pillar"9 (Working paper) the Commission sets out the main principles underlying an effective and efficient deployment strategy for the SES technological pillar. It also presents a set of basic options for the governance of a coordinated deployment of technologies and procedures resulting from the SESAR development phase and compliant with SES objectives and requirements (SES technologies and procedures).

The Commission aims at presenting by end 2011 a proposal to the Council for the preparation and transition to the SESAR deployment phase emphasising its governance and its adequate and, if appropriate for some stakeholders, innovative funding mechanisms10. For this purpose, it will carry out an impact assessment to establish the necessary conditions and measures, in particular in terms of governance and financing and funding mechanisms that best ensure an effective deployment of SES technologies and procedures. In order to assist the Commission in the preparation of the impact assessment and ensure the appropriate consultation of the ATM stakeholders, a dedicated Task force is established on the basis of the following terms of reference.

1.

Basic options and main principles for a deployment strategy The Task force will have to assess possible governance and funding/financing mechanisms within the following three options, or a possible combination of them, for a coordinated deployment of SES technologies and procedures: a) High level steering through existing SES framework This is the baseline option in which, through the existing SES instruments and mechanisms, the Commission would drive the deployment with new Implementing Rules and Community Specifications to ensure the timely achievement of key milestones by the relevant stakeholders and avoid compromising the subsequent deployment steps. The responsibility for maintaining, executing and coordinating the Deployment strategy lies principally with the industry: users and service providers.

The Commission, as regulator, would exercise an oversight function. b) Designation of the "network manager" Building on option a), the Commission could propose to extend the role of the network manager11 to take the responsibility for coordinating, with the relevant stakeholders, the execution and maintenance of the Deployment strategy. c) Establishment of a European partnership

9

SEC(2010) 1580 Final

10

Council Resolution on the endorsement of the European Air Traffic Management Master Plan, art. 9 – 30 March 2009

11

Article 6 of Regulation (EC) 551/2004, OJ L 96, 31.03.2004

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Also building on option a), the responsibility for organizing the execution and maintenance of the Deployment strategy could be entrusted to a European publicprivate partnership, involving the relevant pan-European stakeholders. The Commission would have a leading role in its setup building on the experience of the SJU. The Task Force will perform its assessment taking into account the following principles: 1)

The SES and SESAR are high priority for the EU Common Transport Policy

2)

SESAR is an integral component of the SES and an essential enabler for its implementation

3)

Deployment is the natural and necessary sequence of the development phase

4)

The right conditions for deployment should be defined through the "SES method", while preserving the driving role of industry in this context

5)

An effective governance is key to steer the deployment process

6)

The SJU will successfully deliver expected results

7)

The European ATM Master Plan is an essential tool for deployment

8)

The human factor will be key in ensuring the change process

9)

Deployment of SES technologies and procedures requires the involvement and buy-in of civil and military stakeholders

10) EU funding will be focused on projects delivering network benefits

2.

Composition of the Task force

The members (Members) of the Task force will be: the European Commission, the Eurocontrol Agency, the European Aviation Safety Executive Agency and the SESAR Joint Undertaking. The Task Force will be chaired by the Commission. The Task force should cover the five SES pillars (Performance, Safety, Technology, Human factors and Airports) and assure the consultation of the widest possible range of stakeholders.

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It shall be composed of the following participants: Member

– – –

participants The Director General Mobility and Transport The Director of Air Transport The Head of Unit for the Single Sky and ATC modernisation Secretary Director General The Principle Director of ATM Management

European Aviation Safety Executive Agency

–

The Executive Director

SESAR Joint Undertaking

–

The Executive Director

– European Commission

Eurocontrol

– –

Members shall also appoint alternate representatives to ensure continuity of the task force's work.

To carry out the detailed work including the stakeholder consultation, a group of experts will be established. Each of the four organisations shall designate, as appropriate, experts to address the specific tasks assigned to them. The Commission will ensure the appropriate involvement of military stakeholders together with experts from the European Investment Bank and the industry through the ICB. The Task force constitutes a temporary working arrangement to support the Commission in its work to prepare a proposal for a deployment strategy for SES technologies and procedures.

3.

Duration

The task force is expected to start its work on 13 January 2011 and shall deliver its conclusions by early April 2011 at the latest.

4.

Objectives and tasks

The Task force will assist the Commission in developing the EU deployment strategy for SES technologies and procedures.

Its work shall be focused on the governance and financial mechanisms to be established to ensure synchronised and efficient deployment of SES technologies and procedures by all stakeholders and the appropriate governance framework that will allow them to be effectively implemented.

The holistic assessment of the three basic options in the Working paper will be carried out in accordance with the work plan in Annex I. The Members, within their respective competences, are expected to table any economic, technical and legal analyses relevant to the deployment of SES technologies and procedures.

In particular, the Task force shall address the following tasks:

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(1)

Achieve common understanding and background12

(2)

Provide analysis on key factors for deployment financing

(3)

Assess governance options and funding/financing mechanisms using SWOT methodology (Strengths – Weaknesses – Opportunities – Threats)

(4)

Report to the Commission

The above tasks are further detailed in the Work Plan annexed to the Terms of Reference, including a proposal for the allocation of contributions amongst the Members.

5.

5.1.

Organisation of work Organisational arrangements The work shall be performed by the Task Force supported by an Experts Group.

The Commission chairs the meetings of the Task force and moderates the meetings of the Experts Group.

In order to cover the five SES pillars (Performance, Safety, Technology, Human factors and Airports) and assure the consultation of the widest possible range of stakeholders, the Task Force could perform stakeholder consultations.

5.2.

Stakeholder consultations Members could make use of existing consultation mechanisms within their organisations to ensure the widest consultation of stakeholders. In order to avoid duplication and overlaps and to ensure consistency in the consultation process, Members shall properly coordinate their respective consultation process. Members shall communicate the relevant opinions resulting from these consultations to the Task force.

The Task force may organise direct consultations through thematic workshops and written contributions on an ad-hoc basis as needed.

The stakeholder consultation process will also include a public consultation that shall be launched by the Commission.

The Commission shall consult the ICB and will provide the Single Sky Committee with progress reports on the work of the Task force. The Commission will also consult the Social Dialog.

5.3.

Secretariat and logistical support

A secretariat coordinated by the Commission will be designated amongst the Members at the first meeting. The secretariat will be responsible for:

12

On the basis of the Working Paper and a background paper specifically developed by the Commission services

53

– Organising and calling for meetings and thematic workshops where appropriate – Drafting minutes of meetings – Assuring appropriate communication amongst Members and Experts – Consolidating contributions from Members, drafting and editing the final report The any organisational decisions of the Task force shall be taken by consensus.

The logistical support shall be provided by the Members and shall consist in the provision of meeting rooms and related support facilities, hosting a dedicated website. The Task force shall decide at its first meeting the necessary arrangements for the duration of the Task force. Members shall bear the costs for their respective contributions to the Task force including logistical support.

5.4.

Work plan

A draft work plan for the Task Force is annexed to the Terms of Reference. The work plan provides the roadmap towards the final report of the Task Force, detailing the tasks identified in chapter 4 above, setting deadlines and proposing an initial allocation of actions.

5.5.

Final report

The Experts Group shall present a draft final report on its work describing the process, activities carried out and outcome. The draft final report will be presented to the Task Force by mid-March 2011 for discussion.

The final report will be presented for approval at the last meeting of the Task force in early April 2011. Should the Task Force fail to reach a consensus on a single deployment option, the final report would reflect the various positions and their rationale. The final report will contribute to the Commission's impact assessment for preparing a proposal to the Council on a deployment strategy.

The Commission may use for its own purposes any information, document or report provided to or produced by the Task force. The Commission may publish such information or documents, or parts of them, unless the Commission is informed that they contain commercially sensitive or confidential data.

5.6.

Meetings

The Task force shall meet twice after its inaugural meeting. An intermediate meeting shall be held by mid-March 2011 when the draft final report will be available. Then, a final meeting shall be held early April 2011 at the latest to adopt the final report. Some tentative dates for the meetings are proposed in the Work Plan and will be fixed at the first meeting of the Task Force. All Task force meetings shall be held in Brussels. The results of the meetings will be recorded through summary records drafted by the secretariat.

The group of experts appointed by the Members shall also meet in accordance with a predefined schedule and shall provide the Task Force with the necessary 54

input for its meetings. The first meeting of the Experts Group shall take place not later than a week after the Task Force inaugural meeting. Then, the Experts Group shall meet at least once every two weeks up to the closing of the Task Force. Some tentative dates for the meetings are proposed in the Work Plan and will be fixed at the first meeting of the Experts Group.

5.7.

Working language

The working language of the Task force is English.

55

ANNEX 2: Participants Task Force Meetings

MEMBERS

ORGANISATION

RUETE Matthias

EC

GOUDOU Patrick

EASA

McMILLAN David

EUROCONTROL

KY Patrick

SESAR-JU

Mr Daniel Calleja, Mr Matthew Baldwin, Mr Luc Tytgat, DG MOVE Mr Timothy Fenoulhet, Secretary, EU Liaison Officer, DG MOVE

Experts Group Meetings

NAME

ORGANISATION

Carlo BORGHINI

SESAR-JU

Alain SIEBERT

SESAR-JU

Jose CALVO

SESAR-JU

Denis KOEHL

SESAR-JU

Pascal DIAS

EUROCONTROL

Bernard MIAILLIER

EUROCONTROL

Luc LETREGUILLY

EUROCONTROL

Henk HOF

EUROCONTROL

Frédéric COPIGNEAUX

EASA 56

Laszlo KISS

EASA

Juan MACHO

ICB

G端nter MARTIS

ICB

Kurt ANDREASEN

ICB

Manfred MOHR

ICB

Mark BURGESS

ICB

Dirk ARHELGER

ICB

Fernando MORATE

ICB

Klaus HEEGE

EIB

Karine CENCI

EIB

Levente-Horvarth GUILLEMOT

EIB

Karine CENCI

EIB

Steve JAMES

Observer

Roland BECKER

Z端rich Airport

Umberto ROSSI

EC Military representative

Mr Luc Tytgat, Moderator, DG MOVE Ms Doris Schroecker, Alternate Moderator, DG MOVE Mr Nicolas Warinsko, Alternate Moderator, DG MOVE Ms Katarzyna Gryc, Research Programme Officer, DG MOVE

Mr Timothy Fenoulhet, Secretary, EU Liaison Officer, DG MOVE Ms Bernadette Tamo, EUROCONTROL

57

TF#1 13/01

58

EG#1 20/01

TF#2 16/02

Fin/Fund Workshop 17/02

EG#2 03/02

TF#3 17/03

EG#3 18/02

EG#4 10/03

Common understanding Analysis Assessment Reporting

TF#4 07/04

EG#5 24/03

ANNEX 3: Working schedule

EG SES Social dim.

2/02

ANNEX 4: Assessment grid The following matrix provides a detailed assessment by the Experts Group for each of the 3 governance options proposed in the Commission Staff working paper. This assessment has been performed against 9 attributes and 5 core functions identified in section 3.3 above.

There is a general consensus on the assessment of option 1: this is a good basis as it already provides efficient governance mechanisms but limited to high institutional levels, hence lacking industrial commitment, required level of detail for efficient programme management and risking misalignment between high level decisions and actual implementation by stakeholders.

Assessment of options 2 and 3 has been performed assuming option 1 is included and provides the common baseline for both options 2 and 3. The assessment of options 2 and 3 highlighted different interpretations of the options' definition and some divergence amongst experts.

In broad terms, Eurocontrol's experts support option 2 whereas SJU's, ANSPs' airlines' and airports' experts together support option 3. Other experts remain neutral at this stage. Nevertheless with regard to ANSPs' position, while their assessment point to a PPP solution, they expressed concerns which need further examination on aspects such as composition/membership.

59

Attributes of the governance Independence

Þ Ability to take decisions in interest of the community as a whole, not particular stakeholder

OPTION 2

OPTION 1

Indicator / Description HIGH

But limited to regulation Risk of misalignment of investment decisions

LOW

Position A supported by SJU, ANSPs, airports and airlines As a Service Providers having to deploy technology for itself, including possible indirect economic interest, NM will be in a situation of permanent perceived conflict of interest.

NM is formally not independent from Eurocontrol decision-making process (PC unanimity).

Furthermore the relation Eurocontrol/NM is still to be defined by the PC and the impact of the unanimity principle to be verified.

HIGH

Position A supported by SJU independence will be guaranteed by strong EU oversight and rigourous application of COI management procedures. Furthermore the presence of "different" interests will reduce the risk of CoI. Public procurement processes will be established to ensure the transparent financing of activities

HIGH

Position B, supported by ECTL Capability to balance Stakeholders requirements in an impartial way.

The adopted IR and nomination Decision guarantee the lack of conflict of interest of the NM (Board with majority decision-making and gathering all stakeholders. No voting right for the Eurocontrol representative)

LOW

Position B, supported by ECTL Difficulty to ensure network objectives are pursued by investors as members with different and sometimes diverging objectives have conflict of interest when deciding fund allocations

60 Accountability

Þ

Need/ ability to achieve the results

Þ Reporting line: Single European Sky context (Regulators) Þ Indirect Reporting line: to the stakeholders Þ Clear assignment of responsibilities

LOW

OPTION 3

MED

NM is accountable to the Commission and SSC. Accountability mechanisms to the industry and stakeholders would have to be developed

Note: Military involvement to be further considered MED

Position C, supported by ANSPs, airlines and airports A combination of partners in a PPP would probably cover in a balanced way most of the main stakeholder interests (independence at company level might be arguable)

HIGH

because the new set up allows for clear accountability by definition

Attributes of the governance Representativityparticipation of stakeholders and representation of those who have to invest

OPTION 1

Indicator / Description Þ

Right people in the right place

Þ Formal process which engages stakeholders who need to take actions

61 Þ Appropriate consultations of those who are affected but not involved in particular actions Þ Commitment of stakeholders to implement actions

OPTION 2

OPTION 3

HIGH

for institutions

HIGH

Consultation is a strength of the NM. In addition, all major stakeholders segments involved in Deployment are in the Board,

HIGH

Position A supported by SJU, ANSPs, airports and airlines Adequate representation of the different stakeholders, directly and indirectly involved in the process with the empowerment to commit and align budgets for implementation. Formal process of engagement ensured by contractual means. The capability goes beyond consultation, goes to participation to the decision making with strong oversight.

LOW

not adequate for those who invest

LOW

Commitment • The current processes are not committing enough the stakehodlers who have to make the investment decisions. Existing arrangements will have to be enhanced, as it is the case for the PPP option.

• Commitment of military (through military-military consultation) could be possible but is to be established

LOW

Position B, supported by ECTL Difficulty to ensure a proper representation of interests both in coverage and repartition terms between individual members of the PPP. Risk of a 2-speed deployment in favour of PPP members only.

Military commitment at risk, never experienced in a PPP

Note: NM is assumed to be represented in the PPP

Attributes of the governance Recognition of decisions

OPTION 1

Indicator / Description Þ Acceptability to States (ministries of Transport and Defence)

62

Þ Ability to assure States and Mil of their engagement, transparency and influence as required as well the benefits from having such a scenario

HIGH

High but limited to Regulatory aspects

OPTION 2

LOW

Position A supported by SJU, airlines and airports Added value of the NM as compared to Option 1 remains to be proven by experience. Current mandate is tactical (day to day operations) not strategic

HIGH

Position A supported by SJU Proposals will be endorsed by a governing board where the stakeholders will commit to deliver.

Empowerment through the EU when needed, through processes already established. Full transparency and consensus in the decision making process to ensure alignment with stakeholders investment decisions.

Military engagement at the PPP directly and through EU existing mechanisms.

HIGH

Position B, supported by ECTL Decisions are taken within a EU framework, enforcement is ensured

by Community method.

Disagreement can be referred to EC and SSC .

LOW

Position B, supported by ECTL Decisions are likely to have limited impact on stakeholders that are not within the PPP membership. In addition, the PPP members, if a selected set of players are likely to experience conflict of interest when deciding on issues affecting the entire network.

MED

Position C, supported by ANSPs States and some stakeholders would probably feel comfortable retaining control through Eurocontrol decision making bodies

MED

Position C, supported by ANSPs, airlines and airports Depending on the final institutional/industrial balance in the PPP Board of Governors, States and stakeholders will feel more or less comfortable in comparison with the previous scenarios.

Þ Acceptability to civil and military airspace Users and service providers and airports of the Network

Þ Empowerment over the stakeholders Þ Transparency and influence as required

OPTION 3

Attributes of the governance Time to establish the governance structure

OPTION 1

Indicator / Description Þ

The shorter the better

HIGH

Short time to establish because already in place

OPTION 2

MED

About a year

OPTION 3

MED

LOW

Costs of the governance structure

Þ Initial costs: costs for setting up the organisational structure

LOW

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Þ Running costs: management overhead

Link with R&D

Þ Data urgently needed! Þ Connected with R&D but able to take independent decisions Þ Ensure consistency

Þ Assess deficiencies of current systems Þ Identify the need for new R&D activities

Low as there are no additional costs for the setting up of the structure.

MED

Low marginal cost foreseen for the setting up of the additional function.

However ECTL overheads are considered expensive. They would have to be sorted out in the extension decision.

But there are very high hidden running costs. Also consider costs of inaction

LOW

There is no direct connection

HIGH

LOW

LOW

Position A supported by SJU, ANSPs, airports and airlines NM brings no added value.

HIGH

Position B, supported by ECTL Adequate connection with R&D, NM can identify, and inform on, needs.

Adequate link with performance scheme.

Military R&D presently coordinated through ECTL/CMAC

Position A supported by SJU, ANSPs, airports and airlines Same as option 2 Position B, supported by ECTL Likely to be several years due to need to start new approach from scratch and compose membership for ATM aspects more critical than research for most stakehodlers.

Position A supported by SJU, ANSPs, airports and airlines A leaner and more cost effective structure than NM (due to Eurocontrol legacy costs) could be ensured Position B, supported by ECTL PPP scope is undefined. If more than a simple fund manager, this could be costly, not only to set up, but also to acquire appropriate expertise and manage it in a flexible way.

It is expected most of SJU’s operational members are natural candidates to join the future PPP and in addition provide connection with R&D

HIGH

Position A supported by SJU, ANSPs, airports and airlines

MED

Position B, supported by ECTL Criterion of limited relevance.

Building a PPP on the current JU would ensure a form of continutity.

However, the scope, objectives, methods, membership are so different that the close interconnection appears of limited added value.

Functions Planning

OPTION 1

Indicator / Description Þ Programme management /Project planning/ prioritisation of projects: what to implement, by whom and when, where? Business case, indication it is ready for deployment

LOW

Note: Maintenance of the ATM Master Plan is already organised and managed by SJU

Planning remains too high level, with no connection to the lower level, except for the Network Manager (through connection between Master Plan and NM Strategic Plan)

OPTION 2

LOW

Position A supported by SJU, airports and airlines No added value, ATM MP and WPC activities cover the planning need even for deployment

HIGH

Position A supported by SJU, ANSPs, airports and airlines Complementary to WPC, PPP is created to ensure deployment execution (Programme Management)

HIGH

Position B, supported by ECTL NM ability to translate the MP planning into a deployment focused tool that allows for better synchronisation, prioritisation and more dynamic updates

LOW

Position B, supported by ECTL No added value compared to option 2, with risk of multiplication of planinng and reporting mechanisms and tools. Non-PPP members are left aside resulting in a 2-speed deployment in Europe.

MED

Position C, supported by ANSPs Technical expertise regarding planning is certainly inhouse…management should be reinforced

Note: need to consider maintenance of the ATM Master Plan after 2016

64

Synchronisation

Þ European Level Benefit Management Þ Ability to identify the critical Network benefit areas and monitor their achievement in operations, i.e. during operational use of project deliverables

LOW

OPTION 3

HIGH

Functions Coordination

OPTION 1

Indicator / Description synchronised execution of the planning

Þ

Too high level Lack of incentive for the industry Lack of commitment

LOW

Position A supported by SJU, airports and airlines No commitment, clear no added value compared to otpion one, addition and justification of overheads

HIGH

Position B, supported by ECTL and favoured by the military Commitment through binding performance targets for deployments in relation to the network performance while respecting local initiatives as appropriate. The NM has the capability to define measures for its operations.

Howver, the way to fully commit stakehodlers to deployment is still to be defined in the context of SESAR Deployment, requiring new mechanisms. In particular, incentives and common projects could provide appropraite responses to this question.

MED

Position C, supported by ANSPs - does not ensure commitment with present working arrangements - would need enhanced operator involvement to be able to assign roles and responsibilities clearly - the technical expertise contributing to the plans would certainly be ensured. However, project management skills should be enhanced

Coherent deployment process

Þ Ability for the deployment process to complement existing European Level processes, institutions and bodies ensuring all who have a role to play and have the ability to contribute with regard to standards and regulation Þ

LOW

OPTION 2

Buy-in of stakeholders

65 Þ Stakeholder commitment to Plan, execute and invest Þ Ability to achieve binding commitment to plan from investing stakeholders within required action time to achieve benefits and/or mitigate implementation risks Þ Decision making capability Þ Ability to provide clear and appropriate roles and responsibilities for the deployment process and escalation process for definitive decision Þ Programme Management capability Þ Ability to manage complex multiprogramme, multi stakeholder portfolios at the European Network Level or regional level

OPTION 3

HIGH

subject to adequate membership and decisions recognitions by non members The issue of recognition of the PPP decisions by the non members is a critical aspect to be addressed.

Functions Human factor, training, social aspects

Þ Ensure buy-in by staff , staff organisations

MED

Þ Address staff on issues where there would be an effect on coordination/synchronisation

LOW

66

Coordination with the political level

OPTION 3

Position A supported by SJU, ANSPs and airlines no added value compared to option 1; the NM training facility appears to be high costly for the service providers which in any case have their own training facilities

HIGH

Position A supported by SJU, ANSPs and airlines Possibility of direct involvement of social partners by definition of the PPP and involvement of the organisations dealing with HF aspects

Ability to influence the buy-in

MED

Position B, supported by ECTL and airports and favoured by the military some contribution in coordinating organisations employing operational staff

MED

Position B, supported by ECTL and airports some contribution in coordinating organisations employing operational staff

Þ Through consultations, awareness actions, participation Þ Towards all stakeholders involved and affected Þ Ensuring awareness at political level

HIGH

Consensus on training aspects

Þ International relations

for human factor and social dialogue: There is a structured social dialogue at EU level for training aspects

OPTION 2

LOW

Þ

Communication

OPTION 1

Indicator / Description

HIGH

but at high / institutional level only

MED

HIGH

HIGH

but limited to institutional level with risk of disconnection / misalignment with industry / local community (for airports)

MED

HIGH

By construction of the PPP

HIGH

for high level / institutional matters

HIGH

HIGH

LOW

for standardisation and military aspects

Position A supported by SJU, ANSPs, airports and airlines By definition of the PPP. In addition, members could interact at international level in a coordinated manner; it would add technical expertise of its members to the Institutional international relations leveraging on existing competencies and without additional costs

MED

Position B, supported by ECTL This would be yet another actor on the international relations scene, with a need to coordinate positions and actions

Capacity to deal with political level

Þ Ability to interact with non EU countries/parties, Þ Monitoring of international similar/related activities

Þ International organisation on technical and competition aspects

Note: military interests not covered in the legal framework

Functions

OPTION 1

Indicator / Description

Capacity to coordinate with industry (system suppliers and manufacturing industry)

Management of common projects (governance)

OPTION 2

67

HIGH

for high level matters (ICB)

LOW

on detailed actions because of lack of detailed planning + no interaction with the commercial part

LOW

as there is no existing structure to coordinate the various common projects that may be decided by the Commission with the SSC

HIGH

LOW

but link with performance scheme

LOW

Well established and efficient links with the manufacturing industry building on respective businesses.

OPTION 3

HIGH

Position A supported by SJU, ANSPs, airports and airlines The partnership will include operational industry members interacting on a continuous basis with suppliers and manufacturers

MED

Position B, supported by ECTL Because some system suppliers and manufacturing industry may not be member of the PPP, the links will exist but will be more difficult to manage without risks of market distorsion.

HIGH

by definition of the PPP’s core business: programme management

Position A supported by SJU Poor added value compared to WPC

HIGH

Position A supported by SJU, ANSPs, airports and airlines Not in conflict of interest when verifying the performance

HIGH

Position B, supported by ECTL Monitoring of actions critical to network performance with higher frequency

LOW

Position B, supported by ECTL Risk of duplication of effort with other mechanisms

MED

Position C, supported by ANSPs, airports and airlines as opposed to scenario 3 being high because a PPP with operator involvement will certainly be closer to the “reality” of both deployment and operations indicators

LOW

Position A supported by SJU, airports and airlines

HIGH

Position A supported by SJU, ANSPs, airports and airlines Not in conflict of interest with running the performance

MED

Position B, supported by ECTL and ANSPs ANSPs considers scenario 2 is medium as opposed to scenario 3 being high because a PPP with operator involvement will certainly be closer to the “reality” of both deployment and operations indicators

LOW

Position B, supported by ECTL Capability to manage overall deployment costs and guaranty cost / benefit realisation is likely to be limited by confidientiality of cost data, as well as by a membership which will not include represenative of all cost centers.

MED

Monitoring Verifying execution and performance

Cost control

Þ Availability and reliability of a monitoring/reporting mechanism

Þ Availability of cost monitoring/reporting mechanism

LOW

Functions Financial Management

OPTION 1

Indicator / Description Þ Funding and Financing Management

LOW

68

Þ Ability to secure, transparently manage and allocate funding and financing instruments as required to overcome financial risks within implementation

Enforcement

Þ

Ability to mobilise

Þ E.g. ensure commitment through peer pressure, business cases, operational and financial incentives/disincentives, common (public) procurement, contracts Þ Issue recommendations, including link to potential regulatory actions

HIGH

It is one of the core functions of a regulatory approach, but there is a long reaction time. Furthermore the military aspects has to be addressed in a specific way (being simultaneously user, airport operator and ANSP)

OPTION 2

OPTION 3

LOW

Position A supported by SJU, ANSPs, airports and airlines Funding and financing outside the role of the NM and no competencies on EU financing models. Cost control goes beyond data collection and relates to the capacity to assess the value for money of the funding and financing compared to the activities realized. No possibility for the EU to audit the use of the funding or for ECA/OLAF.

HIGH

Position A supported by SJU, ANSPs, airports and airlines Most flexible and effective approach to leverage both public and private capabilities, de-risk

MED

Position B, supported by ECTL and favoured by the military Capability to manage EU funding already established. However, developments would be needed in this area to fully exploit incentives and common project capabilities New mechanisms are needed on top of established processes.

MED

Position B, supported by ECTL Same challenge as for the NM option. However all capabilities would have to be established from scratch, which can be a tricky exercise.

HIGH

Position A supported by SJU, ANSPs, airports and airlines The governance model is including the participation of the EC/EU to the PPP. In this respect, while the direct access to the enforcement approach in the extreme cases where it would be needed is much faster than in the case of the NM.

LOW

Position B, supported by ECTL Commitment is likely to be limited to the members. In any case, new mechanisms need to be developed from scratch.

MED

Note: the military aspects must be addressed on a case by case (being simultaneously user, airport operator and ANSP). Committment can be reached through MS.