prb assessment of rp2 fab revised performance...

PRB Assessment Report of RP2 FAB Revised Performance Targets – Blue Med FAB

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PRB Assessment of RP2 FAB Revised Performance Targets Blue Med FAB

Version 3.1

Edition date: 16/10/2015


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COPYRIGHT NOTICE AND DISCLAIMER

© European Union, 2015 This report has been prepared for the European Commission by the Performance Review Body of the Single European Sky, in its capacity as an advisory body to the European Commission. Reproduction is authorised provided the source is acknowledged. However, neither the European Commission, nor any person acting on its behalf, may be held responsible for the use which may be made of the information contained in this publication, or for any errors which may appear, despite careful preparation and checking.


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Table of Contents

1 INTRODUCTION ................................................................................................................................... 5

2 CONTENT OF THE SUBMISSION ............................................................................................................ 5

3 CAPACITY ............................................................................................................................................. 6

3.1 EN ROUTE DELAY LEVEL ................................................................................................................................ 6 3.2 EN‐ROUTE CAPACITY RECOMMENDATIONS ...................................................................................................... 8 3.3 PRB CONSIDERATIONS ................................................................................................................................ 8 3.4 PRB FINDINGS .......................................................................................................................................... 9

4 COST‐EFFICIENCY ............................................................................................................................... 10

4.1 ITALY: OVERVIEW OF THE EC DECISION (2ND MARCH 2015) ............................................................................. 10

4.2 ITALY: SUMMARY OF CHANGES IN THE REVISED PERFORMANCE PLAN (JULY 2015) ............................................... 10 4.3 ITALY: EN‐ROUTE CHARGING ZONE ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION .................. 12 4.4 ITALY: TERMINAL CHARGING ZONES ASSESSMENT FOLLOWING REVISED PERFORMANCE PLAN SUBMISSION ................. 18

ANNEX 1: EN‐ROUTE CAPACITY CONSIDERATIONS ...................................................................................... 21

LEGISLATION ....................................................................................................................................................... 21 REVISION OF EN‐ROUTE CAPACITY TARGETS ............................................................................................................. 21 APPROPRIATE MEASURES FOR REACHING IMPROVED EN‐ROUTE CAPACITY TARGETS ...................................................... 22 ADDITIONAL INFORMATION ................................................................................................................................... 22 NETWORK OPERATIONS PLAN: CAPACITY PLANS ..................................................................................................... 22 REMEDIAL MEASURES .......................................................................................................................................... 22 OTHER CONSIDERATIONS ...................................................................................................................................... 24 ACTUAL CAPACITY PERFORMANCE DURING RP1 ....................................................................................................... 25 CAPACITY PLANNING IN BLUE MED ACCS ............................................................................................................... 27 DOCUMENTS USED FOR CAPACITY ANALYSIS: ........................................................................................................... 31

REFERENCES ............................................................................................................................................... 32

Table of Figures FIGURE 1: EN‐ROUTE COST‐EFFICIENCY TARGETS IN RP2 INITIAL AND REVISED PPS ................................................................. 13

FIGURE 2: EN‐ROUTE TSU FORECASTS OVERVIEW ............................................................................................................ 14

FIGURE 3: TERMINAL ANS COST‐EFFICIENCY TARGETS FOR RP2 INITIAL AND REVISED PPS ....................................................... 18

Table of Tables TABLE 1: COMPARISON OF EN‐ROUTE CAPACITY TARGETS AT LOCAL LEVEL WITH THE FAB REFERENCE VALUES ................................ 6

TABLE 2: COST OF ADDITIONAL DELAY TO AIRSPACE USERS ................................................................................................... 6

TABLE 3: EXTRACT FROM NETWORK OPERATIONS PLAN 2015‐2019 .................................................................................... 7

TABLE 4: INDIVIDUAL ANSP CONTRIBUTIONS TO THE FAB REFERENCE VALUE .......................................................................... 7

TABLE 5: INITIAL AND REVISED EN‐ROUTE COST‐EFFICIENCY TARGETS FOR RP2 ...................................................................... 12

TABLE 6: EN‐ROUTE TSU FORECASTS – INCLUDING STATFOR FEB. 2015 ........................................................................... 14

TABLE 7: ECONOMIC ASSUMPTIONS .............................................................................................................................. 15

TABLE 8: INITIAL AND REVISED TERMINAL COST‐EFFICIENCY TARGETS FOR RP2 ....................................................................... 19


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1 INTRODUCTION 1.1.1 Pursuant to Commission Implementing Regulation (EU) No 390/2013i, the Blue Med

FAB delivered its Performance Plan on 1 July 2014.

1.1.2 The PRB submitted an initial assessment report to the Commission on 6 October 2014.

1.1.3 Further on, the Commission Implementing Decision (EU) 2015/347ii established that targets in the key performance areas of capacity and cost-efficiency (for Italy) submitted by the Blue Med FAB are not consistent with the relevant Union-wide performance targets.

1.1.4 The Commission therefore asked the Blue Med FAB States to revise their capacity targets downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan (NOP).

1.1.5 In addition, Italy should also revise their en route determined unit costs downwards.

1.1.6 The Blue Med FAB submitted revised targets on 9 July 2015. The PRB has assessed these revised targets including all other relevant information provided and presented its conclusions on the new targets in this report.

1.1.7 This report is an integral part of the PRB assessment deliverables.

2 CONTENT OF THE SUBMISSION 2.1.1 The Blue Med FAB submitted a revised Performance Plan on 9 July 2015.

2.1.2 The submission included:

The body of the plan, including only those parts which were changed;

2.1.3 Changes were identified in the new submission (new text in red colour)

2.1.4 The following references to the PRB observations / recommendations were included on the following items:

3.1.(a).(ii) - Safety KPI #2: Application of the severity classification based on the Risk Analysis Tool (RAT) methodology;

3.1.(a).(iii) - Safety KPI #3: Just Culture;

3.1.(a).(iii) - Optional section - Additional Environment KPI(s).

2.1.5 The PRB notes that the Blue Med FAB has provided updates on the following points:

HANSP contribution to FAB targets;

Statement from the Republic of Cyprus on the RP2 capacity KPA;

Investment plan for Cyprus;

Targets for Terminal and airport ANS ATFM arrival delay per flight (Italy and Greece);

Additional Capacity KPI(s) for Italy;

Incentive schemes for the capacity targets (Italy, Cyprus and Malta). ;

Military dimension of the plan.

2.1.6 No Annex A was provided with the submission. The PRB notes that a meeting on "Italy - RP2 Cost Efficiency Consultation meeting" was held on 26 June 2015.


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3 CAPACITY 3.1 En route delay level 3.1.1 The EC Decision 2015/347 published on the 2nd March 2015 (see Article 3) states

that: "The performance targets in the key performance area of capacity submitted by Greece, Italy, Cyprus and Malta as regards Blue Med FAB […] should be revised downwards. As a minimum, those targets should be in accordance with the respective FAB reference values set out in the Network Operations Plan. Where the Network Operations Plan specifies remediation or mitigation measures, account should be taken of those measures when revising the performance targets."

2015 2016 2017 2018 2019

Blue Med reference value (NOP June 2014) 0.17 0.18 0.18 0.18 0.18

FAB Target 0.35 0.36 0.37 0.37 0.38

Revised FAB Target 0.35 0.36 0.37 0.37 0.38

Shortfall 0.18 0.18 0.19 0.19 0.20

Consistency check

Table 1: Comparison of en-route capacity targets at local level with the FAB reference values

Primary check:

For en-route capacity, are the FAB targets consistent with the respective FAB reference values (Annex IV section 4(a))?

3.1.2 The Blue Med FAB targets have not been revised and are therefore not consistent with the respective FAB reference values for the years 2015-2019. The additional cost to airspace users, due to the capacity shortfall is expected to be approximately €199 million during RP2, as shown in Table 2.

2015 2016 2017 2018 2019

Capacity shortfall 0.18 0.18 0.19 0.19 0.20

Expected FAB Traffic (000’s) 2,374 2,475 2,550 2,634 2,717

Additional minutes of delay (000’s) 427.3 445.5 484.5 500.5 543.4

Cost of additional delay (€ Million) 35.5 37 40.2 41.5 45.1

Table 2: Cost of additional delay to airspace users

Secondary check:

The PRB will consider the Performance Plans of other FABs and the Network Performance Plan (To see if the Union-wide target can still be met due to more demanding targets being adopted by other FABs.)

3.1.3 No other FAB has adopted capacity targets that will make up for the capacity shortfall from Blue Med FAB.


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Additional information:

Existing, and previous, ANSP capacity plans (Annex II, 3.1c(iii));

3.1.4 The Network Operations Plan 2015-2019 (June 2015 edition) provides a delay forecast for Blue Med FAB, based on existing capacity plans together with STATFOR baseline traffic forecast (February 2015). It is important to note that the delay forecast does not include delays for disruptions such as industrial action or technical failures.

Extract from Network Operations Plan 2015-2019

Year 2015 2016 2017 2018 2019

Annual reference value 0.17 0.18 0.18 0.18 0.18

Delay forecast full year 1.04 1.46 1.78 1.79 1.78

Table 3: Extract from Network Operations Plan 2015-2019

3.1.5 Both the Commission and the PRB raised concerns about capacity planning in Blue Med FAB as far back as 2011. Despite repeated requests to ensure that the Blue Med ANSPs develop and implement suitable capacity plans, capacity plans were continuously downgraded and/or postponed.

3.1.6 According to the Network Operations Plan 2015-2019, three of the seven ACCs in Blue Med FAB are expected to experience capacity shortfalls for the entire reference period, 2015-2019: Nicosia ACC, Makedonia ACC and Athens ACC.

3.1.7 The Network Manager has highlighted remedial actions that can be taken to improve capacity plans at the three ACCs mentioned above, in section 10.2 of the Network operations Plan 2015-2019.

3.1.8 No capacity problems are foreseen in the remaining four ACCs in Blue Med FAB: Brindisi ACC, Malta ACC, Milan ACC, Padua ACC and Roma ACC.


Contribution of individual ANSPs to FAB performance (Annex II, 3.4)

2015 2016 2017 2018 2019

FAB reference value 0.17 0.18 0.18 0.18 0.18

ANSP

contribution

Cyprus 1.50 1.50 1.50 1.50 1.50

ENAV 0.09 0.10 0.11 0.11 0.11

HANSP 0.70 1.40 1.00 0.60 0.50

MATS 0.01 0.02 0.02 0.02 0.02

Aggregated performance 0.49 0.73 0.61 0.49 0.46

Table 4: Individual ANSP contributions to the FAB reference value


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3.1.9 The aggregated contribution expected from the individual ANSPs is not consistent with either the FAB reference value or the proposed FAB targets. In comparison with the FAB reference value, airspace users will incur a capacity related additional cost of €387 million over the course of RP2.


Civil-military cooperation and coordination arrangements (Annex II, 5)

3.1.10 Section 5 of the Blue Med performance plan has been updated listing several ongoing initiatives involving civil military coordination and cooperation. However, the performance plan does not provide any details of how this will translate into badly needed additional capacity, especially in Cyprus and Greece.

3.2 En-route Capacity Recommendations 3.2.1 In accordance with Regulation (EU) No 390/2013 Article 15 (3): since the en-route

capacity part of the revised performance plans for Blue Med FAB are not consistent with the union-wide targets for en-route capacity, the PRB recommends that the Commission decides that Cyprus, Greece, Italy and Malta as members of Blue Med FAB, should take corrective measures.

3.2.2 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the FAB en-route capacity targets for Blue Med FAB are revised to meet the respective reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. The rationale for this recommendation is that the binding union-wide targets for en-route capacity cannot be achieved unless FABs adopt binding en-route capacity targets consistent with their respective reference values.

3.2.3 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB recommends that the level of performance, for en-route capacity, expected for Cyprus, Greece, Italy and Malta, as members of Blue Med FAB, should be, as a minimum, the Blue Med FAB reference values as published in the Network Operations Plan (2014-2018/2019) June 2014 edition. Adoption of such targets will allow the States concerned to take the appropriate corrective measures.

3.2.4 In accordance with Regulation (EU) No 390/2013 Article 15 (4), the PRB suggests that Cyprus, Greece, Italy and Malta, as members of Blue Med FAB, should implement the remedial measures listed by the Network Manager in section 10.2 of the Network Operations Plan (2015-2019). The PRB suggests that those Member States should agree with the Network Manager, as a matter of priority, an action plan to resolve any outstanding capacity issues. The PRB recommends that the implementation of these local actions plans should be closely monitored by the NSAs of the relevant FABs.

3.3 PRB Considerations 3.3.1 In preparation for the PRB to present findings to the Commission, the PRB reviewed

any additional information that was submitted beyond the FAB performance plan.

3.3.2 For the Blue Med FAB, no direct supplementary information was provided to the Commission, or the PRB, save the proposed en-route capacity incentive scheme from Italy.

3.3.3 The PRB considered the remedial measures presented by the Network Manager in the NOP 2015-2019, at the Blue Med ACCs that were identified as having capacity constraints during RP2.


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3.3.4 The PRB considered the en-route capacity incentive schemes presented in the FAB performance plan, and how they propose to function.

3.3.5 Finally, the PRB considered the actual capacity performance during RP1 and the evolution of capacity planning at Blue Med ACCs.

3.3.6 More information on these considerations can be found in annex to this report.

3.4 PRB Findings 3.4.1 The PRB finds that the performance plan of Blue Med FAB, as regards capacity,

does not contribute adequately to the overall EU wide target and therefore fails.

3.4.2 The Commission should invite:

3.4.3 :

Greece and Cyprus to correct the conflicting information and capacity plans without clear milestones in particular the non-alignment with the capacity plans and the NOP.

Blue Med FAB to provide a FAB wide consolidated capacity plan with clear milestones and a firm commitment to deliver improved en-route capacity performance to airspace users over RP2. Blue Med FAB could be asked to coordinate internally, and with the Network Manager, to ensure that the delivery of en-route capacity is coordinated for the benefit of the airspace users over RP2. The RP2 performance plan shall be updated to include the revised capacity plans.

3.4.4 Moreover, in order to provide reassurance that Blue Med FAB is committed to delivering the best possible capacity performance during RP2, Blue MED FAB could be asked to adopt a FAB en-route capacity incentive scheme with the following characteristics:

(i) All delay reasons considered;

(ii) Dead-band between Blue Med FAB reference values and Blue Med FAB Targets.

(iii) Bonuses paid when Blue Med FAB capacity performance is better than respective Blue Med FAB reference value;

(iv) Penalties paid when Blue Med FAB capacity performance is worse than proposed Blue Med FAB Targets.


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4 COST-EFFICIENCY 4.1 Italy: Overview of the EC Decision (2nd March 2015) 4.1.1 The assessment carried out by the EC assisted by the PRB has shown that the RP2

cost-efficiency targets submitted by the BLUE MED FAB for Italy in its initial Performance Plan (PP) (July 2014) are not consistent with the relevant Union-wide performance targets.

4.1.2 The Commission Implementing Decision (EU) No 2015/347 published on the 2nd March 2015 (Whereas (6) refers) indicates that: "Concerning the key performance area of cost-efficiency, the targets expressed in en route determined unit costs submitted by Member States have been assessed, in accordance with the principles laid down in point 5, in conjunction with point 1, of Annex IV to the Implementing Regulation (EU) No 390/2013, by taking account of the trend of en route determined unit costs over the second reference period and the combined period of the first and the second reference period (2012-19), the number of service units (traffic forecast) and the level of en route determined unit costs in comparison to Member States having a similar operational and economic environment. (…)"

4.1.3 The Commission Decision (see Whereas 13) further specifies the reasons for assessing Italy’s cost-efficiency targets as not consistent with the relevant Union-wide performance targets and indicates that: “As regard Italy, its target are based on a planned reduction of its en route determined unit costs over the second reference period by 2,8% per year on average. This is not in line with the targeted reduction of the average Union-wide en route determined unit costs over the second reference period (–3,3% per year). Also over the combined period of the first and the second reference period the planned en route determined unit costs of Italy do not decrease in line with the Union-wide trend (–1,4%, compared to –1,7%). In addition, the target for 2019 is based on planned en route determined unit costs that are substantially above (+16,6%) the average en route determined unit costs of the Member States having a similar operational and economic environment to the one of Italy and around 25% above the Union-wide performance target in 2019.”

4.1.4 The PRB analysis focuses on the changes made to the initial RP2 PP and on the elements that were specifically identified in the Whereas 6 and 13 of the Commission Decision No 2015/347 and which are listed in §4.1.2 and §4.1.3 above. Namely, this analysis is focused, in a first step, on whether the en-route DUC trend is equal or better than −1.7% p.a. over the first and second reference periods combined and −3.3% p.a. over the second reference period. Should the en-route cost-efficiency targets not pass this first step, a second step looks at if the en-route DUC level planned for 2019 is markedly lower than the comparator group average.

4.2 Italy: Summary of changes in the revised Performance Plan (July 2015) Remark: the cost-efficiency analysis does not yet reflect the data submitted by Italy on 5 October 2015 (i.e. 2014 actual costs data). However, as the total 2014 actual costs level does not significantly vary from the total 2014 provisional cost considered in the cost-efficiency analysis, the PRB conclusions remain valid.

It is noted that ENAV actual 2014 costs include a rate of return on equity (5.0%) which is not calculated on the basis of the determined RoE rate (2.9%) as agreed in the RP1 PP. The 2014 cost of capital computed by ENAV is therefore around +18M€ higher than would be with the determined RoE rate.

Pour mémoire, Italy corrected the value for the 2011 actual costs (625.2 M€ instead of 599.1 M€ in nominal terms) with the following note:”Please note that


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total determined costs for 2011 have been adjusted in order to reflect the correct actual amount. Therefore, the efficiency calculated in the combined period is now correct.”

4.2.1 The main differences between the RP2 revised (July 2015) and initial (June 2014) PPs are as follows:

A higher starting point for 2014 in terms of DUC, although this was still based on provisional cost data for 2014;

A downward revision of the DCs provided for each year of RP2 (2015-2019);

An update of the inflation rate for 2014 in line with the published actual 2014 inflation;

A significant downward revision of the en-route total service units (TSUs) forecast for all years of RP2 (2015-2019); and

Overall TSUs and DCs revisions provide an upward revision of the DUC targets over RP2 (except for year 2019).


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4.3 Italy: En-route charging zone assessment following revised Performance Plan submission

4.3.1 The updates shown in this section do not reflect Italy’s most recent updates to their final actual costs 2014 dataThe revised summary results of each check following the revised PP submission are presented below, alongside the headline results of the original assessment.

Overview

The tables below show three sets of data for Italy:

Initial RP2 performance plan (June 2014): showing the initial RP2 performance plan data as published in the PRB Assessment Report of RP2 Performance Plans on 6 October 2014;

Commission Decision (2 March 2015): showing the performance plan data as included in the EC Decision. For a number of States, the Decision data included updates to the data provided in the initial performance plan (e.g. revision of EUROCONTROL costs, revision of the data to lower the 2015 unit rate, etc.); and,

Revised RP2 performance plan (July 2015): showing the data provided in the RP2 revised performance plan.

Table 5: Initial and revised en-route cost-efficiency targets for RP2

In real terms, Italy revised en-route DCs over RP2 are significantly lower than in the initial PP (a cumulative amount of -123.7 M€2009). On the other hand, the en-route TSUs forecast

Initial Performance Plan (June 2014)Key figures: en-route

2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 667.0 696.2 712.2 731.5 750.9 765.9 2.6% 2.8% 2.4%Inflation rate annual % change 0.7% 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index 2009=100 110.2 111.3 112.5 114.0 115.7 117.5 1.5% 1.3% 1.4%Determined costs EUR m (2009) 605.5 625.5 633.0 641.7 649.0 651.6 1.1% 1.5% 1.0%Service units '000s 8 579 9 014 9 447 9 824 10 209 10 630 3.0% 4.4% 4.2%Determined unit cost EUR (2009) 70.58 69.39 67.00 65.32 63.58 61.30 -1.9% -2.8% -3.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 70.58 69.39 67.00 65.32 63.58 61.30 -1.9% -2.8% -3.1%

EC Decision (March 2015) on non-compliance of the RP2 cost-efficiency targetKey figures: en-route

2014F 2015D 2016D 2017D 2018D 2019D2011-19

CAGR2014-19

CAGR2015-19

CAGR

Determined costs EUR m (nom) 696.2 712.2 731.5 750.9 765.9 2.4%Inflation rate annual % change 1.0% 1.1% 1.3% 1.5% 1.6% 1.4%Inflation index 2009=100 111.3 112.5 114.0 115.7 117.5 Determined costs EUR m (2009) 625.5 633.0 641.7 649.0 651.6 1.0%Service units '000s 9 014 9 447 9 824 10 209 10 630 4.2%Determined unit cost EUR (2009) 69.39 67.00 65.32 63.58 61.30 -3.1%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 69.39 67.00 65.32 63.58 61.30 -3.1%

Revised Performance Plan (July 2015) 2014A 2015D 2016D 2017D 2018D 2019D 2011-19 2014-19 2015-19Determined costs EUR m (nom) 657.1 674.7 693.6 712.0 710.9 707.0 1.5% 1.5% 1.2%Inflation rate annual % change 0.2% 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index 2009=100 109.7 110.8 112.0 113.5 115.2 117.0 1.4% 1.3% 1.4%Determined costs EUR m (2009) 599.2 609.0 619.2 627.5 617.2 604.2 0.1% 0.2% -0.2%Service units '000s 8 314 8 558 8 866 9 207 9 554 9 898 2.1% 3.5% 3.7%Determined unit cost EUR (2009) 72.07 71.16 69.84 68.15 64.61 61.05 -1.9% -3.3% -3.8%Exchange rate (2009) EUR:EUR 1.00 Determined unit cost EUR (2009) 72.07 71.16 69.84 68.15 64.61 61.05 -1.9% -3.3% -3.8%

Total RP2Difference between revised and initial en-route DUC % 2.5% 4.2% 4.3% 1.6% -0.4%Difference between revised and initial en-route DUC EUR (2009) 1.77 2.84 2.82 1.03 0.25- Revised en-route TSUs '000s 8 558 8 866 9 207 9 554 9 898 Assessed monetised contribution EUR m (2009) 15.1 25.1 26.0 9.9 2.5- 73.7

DC effect EUR (2009) 16.5- 13.8- 14.3- 31.8- 47.4- -123.7Traffic effect EUR (2009) 31.6 38.9 40.3 41.7 44.9 197.4


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are significantly revised downwards, and therefore contribute to an increase in the gap (+197.4 M€2009) with the RP2 Union-wide targets. Overall, Italy’s revised en-route cost-efficiency targets for RP2 contribute to increasing the gap with the RP2 Union-wide targets by an amount of +73.7 M€2009.

Figure 1: En-route cost-efficiency targets in RP2 initial and revised PPs

Starting point based on 2014 data:

The revised en-route unit cost for 2014 is still provisional (72.07 €2009) and is 2.1% higherthan the figure provided in the initial RP2 PP (70.58 €2009). The PRB notes that this higherstarting point does not reflect all actual data in terms of en-route costs for Italy (See remark in Section §4.2).

Indeed, the en-route revised costs reported for the year 2014 (599.2 M€2009) are not final.These revised costs are lower (by -1%) than the estimated figure that was provided in the initial PP (605.5 M€2009).

In addition, it is noted that Italy has reported the 2014 actual TSUs (8 313 546), a figure significantly lower (-3.1%) than the estimate provided in the initial PP (8 579 000).

Important note:

At the time of performing this assessment, the 2014 costs and traffic (en-route SUs) known at Union-wide level and the resulting “starting point” in terms of unit costs is 53.93€2009. Accordingly, the en-route DUC trend required in RP2 to reach the Union-wide target of 49.10 €2009 in 2019 is a reduction of -1.9% p.a. For consistency purposes, it is important totake into account this figure when comparing a State planned en-route DUC trend to the RP2 Union-wide target since the former is computed using actual 2014 costs and traffic as starting point.

For the sake of completeness, the PRB analysis also presents the RP2 DUC trend using the starting point from the initial PP (see Key point 3. below for further details).

Key points for Italy en-route charging zone

In the following section, five assessment criteria are considered in line with Annex IV of the Performance Scheme regulation (EU No 390/2013). For each criteria, the results of the

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2011 2012 2013 2014 2015 2016 2017 2018 2019

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Revised PP (July 2015) cost-efficiency target for RP2 - Italy

En-route DUC (Initial PP Jun 2014) En-route DUC (Revised PP Jul 2015)

2011-13 actual, 2014F and RP2 en-routedetermined costs (Initial PP Jun 2014)

2011-14 actual and RP2 en-routedetermined costs (Revised PP Jul 2015)

En-route TSU (Initial PP Jun 2014) En-route TSU (Revised PP Jul 2015)


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original assessment are presented along with the changes from the revised RP2 PP.

1. Traffic forecast assumptions:

Original assessment Not Passed

Revised PP (July 2015)

Traffic forecast assumptions were revised

Figure 2: En-route TSU forecasts overview

Table 6: En-route TSU forecasts – including STATFOR Feb. 2015

Assessment of Revised RP2 PP (July 2015):

The en-route TSU planned for 2015-2019 have been revised downwards compared to the information reported in the initial PP (June 214). In fact, the revised TSU forecast lies in between the STATFOR February 2015 base case and high forecast scenarii. The resultingen-route TSU forecasts over RP2 are on average approximately -6% lower for each year of RP2 than those provided in the initial PP. In addition, the revised TSU forecasts are in line with STATFOR February 2014 base case scenario for 2015 and 2016, and between the base case and high scenarios for the 2017-2019 period. Italy confirms that their new traffic scenario is influenced by “the postponement of the economic recovery, initially expected for 2014 and the closure of the Libyan airspace in the last months of 2014”.

In addition, the following two comments provided by Italy in its revised PP are noted:

1. “(…) the new traffic forecast, is in line with the baseline scenario published by STATFOR in September 2014 update.

2. Please note that the current difficult situation related to the temporary closure of the Libyan airspace (by the second half of 2014) is producing effects on the traffic trend, especially for what concerns en-route overflights. The assumptions in the Plan consider the possibility that Libyan situation will continue at most till 2016 summer season. In

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Italy

STATFOR actuals STATFOR Feb 15 high

STATFOR Feb 15 base STATFOR Feb 15 low

STATFOR Feb 14 base PP RP1 Determined

2014 Intitial (June 2014) PP RP2 Determined

Revised (July 2015) PP RP2 Determined

Service Units ('000s) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011-19 2015-19PP RP1 Determined 8,525 8,781 9,071 Actuals, 2014, Initial (June 2014) PP RP2 Determined 8,370 8,139 8,117 8,314 9,014 9,447 9,824 10,209 10,630 3.0% 4.2%Revised (July 2015) PP RP2 Determined 8,558 8,866 9,207 9,554 9,898 2.1% 3.7%STATFOR Feb 15 base 8,314 8,462 8,777 9,025 9,305 9,577 1.7% 3.1%STATFOR Feb 15 high 8,314 8,592 8,986 9,422 9,858 10,286 2.6% 4.6%STATFOR Feb 15 low 8,314 8,322 8,548 8,596 8,717 8,831 0.7% 1.5%STATFOR Feb 14 base 8,358 8,611 8,865 9,090 9,316 9,583 1.7% 2.7%STATFOR Feb 14 high 8,579 9,014 9,447 9,824 10,209 10,630 3.0% 4.2%STATFOR Feb 14 low 8,127 8,178 8,248 8,327 8,417 8,525 0.2% 1.0%Initial (June 2014) PP RP2 vs STATFOR Feb 14 base (%) 4.7% 6.6% 8.1% 9.6% 10.9%Revised (July 2015) PP RP2 vs STATFOR Feb 14 base (%) -0.6% 0.0% 1.3% 2.5% 3.3%The 2015-2019 CAGR is shown (rather than the 2014-19 CAGR) to reflect the fact that not all FABs/States will provide an updated forecast for 2014


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case such exogenous event should continue after that period, Italy may take into consideration the opportunity to ask a review of the cost efficiency targets defined in this Plan (local alert thresholds).” (FAB Revised PP, comments under C in 3.1.D.1 ERT-CZ 3).

2015 Traffic situation to date: For the first six months of 2015, Italy records a -2.8% decrease in en-route TSUs (1st Semester 2015/2014).

2. Economic assumptions:

Original assessment Passed

Revised PP (July 2015)

No changes except for 2014 actual data

Table 7: Economic assumptions


The actual inflation rate provided for the year 2014 was updated to 0.2% (from 0.7% originally), in line with the actual Eurostat inflation (HICP all items) published in April 2015, as required in Article 7.1 of the Charging Regulation (391/2013).

The planned inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April 2014 inflation forecasts.

The latest IMF inflation forecasts released in April 2015 for Italy reflect lower inflation rates over the 2015-2019 period than those published in April 2014. As a result, the inflation rates planned by Italy between 2015 and 2019 are higher than the latest IMF forecasts with differences ranging between 0.3 and 1.0 percentage point (in 2015).

3. En-route DUC trend:

Original assessment Not passed

Revised PP (July 2015) DUC trend was revised


Changes in DCs compared to initial PP:

Italy has revised downwards the DCs for each year of RP2 (see Table 5). Cumulatively over RP2, en-route DCs for Italy are now -3.9% lower than those provided in the initial PP (-123.7 M€2009).

RP2 en-route DUC trend based on 2014 “actual” starting point:

Italy’s en-route DUC is expected to decrease by -3.3% p.a. over the 2014-2019 period, exactly in line with the Union-wide targets for RP2 (-3.3% p.a.) and also better than the reduction planned in the initial PP (-2.8% p.a.).

The en-route DUC trend over the 2014-19 period is better than the RP2 Union-wide DUC reduction required to reach the Union-wide target when the latter is computed using as

Inflation: Italy 2012 2013 2014 2015 2016 2017 2018 2019

Initial (June 2014) PP RP2 annual % change 3.3% 1.3% 0.7% 1.0% 1.1% 1.3% 1.5% 1.6%Revised (July 2015) PP RP2 annual % change 3.3% 1.3% 0.2% 1.0% 1.1% 1.3% 1.5% 1.6%Eurostat/IMF avg annual % change 1.3% 0.2% 0.0% 0.8% 1.0% 1.1% 1.2%Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) p.p. difference 0.0% 0.0% 1.0% 0.3% 0.3% 0.4% 0.4%Initial (June 2014) PP RP2 2009=100 108.0 109.4 110.2 111.3 112.5 114.0 115.7 117.5Revised (July 2015) PP RP2 2009=100 108.0 109.4 109.7 110.8 112.0 113.5 115.2 117.0Eurostat/IMF avg 2009=100 108.0 109.4 109.7 109.7 110.6 111.7 112.9 114.3Difference (Revised (July 2015) RP2 PP vs Eurostat/IMF avg) index difference 0.0 0.0 0.0 1.1 1.4 1.8 2.2 2.7


16

starting point the 2014 actual costs and TSUs (-1.9% p.a.).

RP2 en-route DUC trend based on 2014 starting point from initial PP:

Considering the 2014 forecast starting point from the initial PP (i.e. 70.58 €2009) and the 2019 revised target of 61.05 €2009, the RP2 DUC trend is (-2.9% p.a.), below the initial 2014-2019 Union-wide target trend (-3.3% p.a.).

If the initial PP inflation index is applied, then the 2019 revised target would become 60.77€2009, and the RP2 DUC trend would also be -2.9% p.a., i.e. below the initial 2014-2019 Union-wide target trend (-3.3% p.a.).

En-route DUC trend over the combined RP1 and RP2 periods:

When assessed over the 2011-2019 periodiii, the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide targets (-1.7% p.a.). Italy’s planned en-route DUC profile over 2011-2019 (both RP1 and RP2) mainly reflects the fact that, in real terms, DCs are expected to slightly increase by +0.1% p.a. on average while the number of TSU is planned to grow by +2.1% per year on average over the same period.

If the initial (July 2014) RP2 PP inflation index was applied, then the 2019 revised target would be 60.77 €2009, and the DUC trend over the combined RP1 and RP2 periods would be (-2.0% p.a.), i.e. also better than the 2011-2019 Union-wide target trend (-1.7% p.a.).

2015 DCs versus 2014 actual costs:

Italy’s en-route DCs for 2015 (609.0 M€2009) are +1.6% higher than 2014 provisional actual en-route costs (599.2 M€2009).

4. En-route DUC level:

Original assessment Not passed

Revised PP (July 2015) DUC level was revised


Italy’s revised en-route DUC planned for 2019 (61.05 €2009) is +2.2% higher than the average of the comparators in 2019 (59.76 €2009).

The revised en-route DUC planned by Italy for 2019 is -0.4% lower than in the initial PP(61.30 €2009) but other comparators collective effort was comparatively more important. Actually, Italy’s revised real en-route DUC level is higher than that provided in the initial RP2 PP for each year of the RP2 except in 2019 (differences ranging from +1.6% to +4.3%).

The deterioration in en-route DUC level for years 2015-2018 is due to the combination of a downwards revision of DCs (see point 3), and a downwards reduction of en-route TSUs forecast (see point 1).

5. En-route cost of capital:

Original assessment Not Passed

Revised PP (July 2015) Cost of capital was revised

Assessment of Revised RP2 performance plan (July 2015):

The weighted average cost of capital (WACC) rate used to calculate the cost of capital of ENAV is 5.14% for 2015 and 2016 and 5.64% for each year of the 2017-2019 period. This is lower than the WACC reported in the initial PP (between 6.1% and 6.4%), mainly due to a lower %RoE than in the initial PP (by -1.2 p.p. over 2015-2016 and -0.7 p.p. over 2017-2019).


17

Overall view of Italy en-route cost-efficiency targets


Key points of the analysis of the revised RP2 en-route cost-efficiency targets submitted by Italy:

Compared to the initial PP submitted in June 2014, the en-route DUC reported for the year 2014 has been revised upwards (+2.1%). Although actual 2014 TSU have been used, this higher starting point does not reflect all actual data in terms of en-route costs for Italy.

The en-route TSU planned for 2015-2019 have been revised downwards compared to the information reported in the initial PP. In fact, the revised TSU forecast lies in between the STATFOR February 2015 base case and high forecast scenarii. The resulting en-route TSU over RP2 are on average -6.2% lower in each year of RP2than those provided in the initial PP. The revised TSU forecasts are also in line withSTATFOR February 2014 base case scenario for 2015 and 2016, and between the base case and high scenarios for the 2017-2019 period.

The inflation rates provided for the years 2015-2019 have not been changed compared to the information submitted in the initial PP and are in line with IMF April 2014 inflation forecasts.

Considering the 2014 provisional ‘actual’ starting point, Italy’s en-route DUC is expected to decrease by -3.3% p.a. over the 2014-2019 period, exactly in line with the Union-wide target for RP2 (-3.3% p.a.) and also better than the reduction planned in the initial PP (-2.8% p.a.). Considering the 2014 forecast starting point from the initial PP (i.e. 70.58 €2009) and the 2019 revised target of 61.05 €2009, the RP2 DUC trend is (-2.9% p.a.), i.e. worse than the 2014-2019 Union-wide target trend (-3.3% p.a.).

When assessed over the 2011-2019 period (covering RP1 and RP2), the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide targets (-1.7% p.a.).

Italy’s revised en-route DUC planned for 2019 (61.05 €2009) is -0.4% lower than in the initial PP (61.30 €2009), but +2.2% higher than the average of the comparator group (59.76 €2009). In fact, the revised DUC is higher than that provided in the initial RP2 PP for each year of the RP2 except in 2019 (differences ranging from +1.6% to +4.3%).

The WACC rate used to calculate the cost of capital of ENAV is 5.14% for 2015 and 2016 and 5.64% for each year of the 2017-2019 period. This is lower than the WACC reported in the initial PP (between 6.1% and 6.4%), mainly due to a lower RoE than in the initial PP (by -1.2 p.p. on average over 2015-2016 and -0.7 p.p. over 2017-2019).

Conclusions:

Italy:

The PRB considers that Italy revised en-route cost-efficiency targets for RP2 meet the consistency criteria and are in line with the points identified in Commission Decision


18

2015/347 (Art. 4).

There is a deterioration compared to the initial PP, due to the fact that the downwards revision of DCs was not sufficient to compensate for the substantial downwards revision of the TSUs. Considering the 2014 forecast starting point from the initial PP and the 2019 revised target, the RP2 DUC trend is –2.9% p.a. This is below the 2014-2019 Union-wide target trend (-3.3% p.a.). However, considering the provisional 2014 actual starting point as provided by Italy, the RP2 DUC trend is -3.3% p.a. When assessed over the 2011-2019 period, the en-route DUC trend is planned to be -1.9% p.a. which is better than the trend underpinning the Union-wide target (-1.7% p.a.).

The PRB considers that Italy should carefully manage its traffic risk given that the 2015 traffic (en-route TSUs) outturn so far is below the forecast considered in the revised PP.

4.4 Italy: Terminal charging zones assessment following revised Performance Plan submission

4.4.1 The revised summary results of each check following the revised RP2 PP submission are presented below, alongside the headline results of the original assessment.

Overview of Terminal ANS charging zones (Italy-TCZ 1 and Italy-TCZ 2):

There are two TCZs reported in the RP2 PP for Italy:

TCZ 1 (1 airport: Fiumicino, with more than 225 000 IFR movements): where traffic risk sharing applies;

TCZ 2 (4 airports: Malpensa, Linate, Venezia Tessera and Bergamo Orio al Serio, all with more than 70 000 IFR movements): which Italy decided to exempt from traffic risk sharing;

There were no change of scope of airports between 2014 and 2015, since Italydecide to split its airports into three TCZ from 2014 onwards. Before 2014, Italy was reporting terminal ANS cost-efficiency data for 47 airports in one single TCZ.

Figure 3: Terminal ANS cost-efficiency targets for RP2 initial and revised PPs

85

90

95

100

105

2015D 2016D 2017D 2018D 2019D

Det

erm

ined

un

it c

ost

in

dex

(20

15=

100)

Italy

SES aggregated TANS DUC (Initial June 2014) SES aggregated TANS DUC (Revised July 2015)

Aggregated terminal DUC (Initial June 2014) Aggregated terminal DUC (Revised June 2015)


19

Table 8: Initial and revised terminal cost-efficiency targets for RP2

The combined TCZs assessed monetised contribution provided by Italy through its revised terminal ANS cost-efficiency targets for RP2 represents an increase of +2.1 M€2009

compared to the information provided in the initial performance plan (June 2014). This is fully attributable to an update of 2014 actual inflation (impacting the RP2 DC in €2009). There were no changes in TNSUs or DCs in nominal terms over RP2.

Key points for Italy terminal charging zone

1. Traffic forecast assumptions:

Original assessment TCZ 1: Passed

TCZ 2: Passed

Revised PP (July 2015) No changes


Compared to the initial PP submission, Italy has not revised its TNSU forecast for each of the years during RP2 which is now in line with STATFOR September 2014 base case.

2. Economic assumptions:

Original assessment TCZ 1: passed

TCZ 2: passed



As for en-route, only 2014 actual inflation was updated and the planned inflation rates provided for the years 2015-2019 are identical to the information submitted in the initial PP, and are in line with IMF April 2014 inflation forecasts (and en-route inflation forecasts).

Initial June 2014 Key figures: terminal 2015D 2016D 2017D 2018D 2019D2015-19

CAGR (%)

Determined costs EUR m (nom) 104.2 107.2 107.8 109.8 111.5 1.7%Inflation rate * annual % change 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index * 2009=100 111.3 112.5 114.0 115.7 117.5 1.4%Determined costs EUR m (2009) 93.6 95.3 94.6 94.9 94.9 0.3%Terminal SUs '000s 505.4 518.8 532.2 544.5 555.4 2.4%Determined unit cost EUR (2009) 185.22 183.62 177.66 174.35 170.80 -2.0%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 185.22 183.62 177.66 174.35 170.80 -2.0%

Revised July 2015 Key figures: terminal 2015D 2016D 2017D 2018D 2019D2015-19

CAGR (%)

Determined costs EUR m (nom) 104.2 107.2 107.8 109.8 111.5 1.7%Inflation rate * annual % change 1.0% 1.1% 1.3% 1.5% 1.6%Inflation index * 2009=100 110.8 112.0 113.5 115.2 117.0 1.4%Determined costs EUR m (2009) 94.0 95.7 95.0 95.4 95.3 0.3%Terminal SUs '000s 505.4 518.8 532.2 544.5 555.4 2.4%Determined unit cost EUR (2009) 186.05 184.45 178.46 175.13 171.57 -2.0%Exchange rate EUR:EUR (2009) 1.00 Determined unit cost EUR (2009) 186.05 184.45 178.46 175.13 171.57 -2.0%The 2015-2019 CAGR shown in the table is different from the main en-route comparator period (2014-2019),

the reason for this being the potential for changes to the size and composition of TCZs between 2014 and 2015

Total RP2Difference between revised and initial terminal DUC % 0.4% 0.4% 0.4% 0.4% 0.4%Difference between revised and initial terminal DUC EUR (2009) 0.83 0.82 0.80 0.78 0.77 Revised TNSUs '000s 505.4 518.8 532.2 544.5 555.4 Assessed monetised contribution EUR m (2009) 0.4 0.4 0.4 0.4 0.4 2.1


20

3. Terminal ANS DUC trend:

Original assessment

TCZ 1: passed with reservations


Revised PP (July 2015) No changes in trend


Italy’s terminal DUC is expected to decrease on average by -2.0% p.a. over the 2015-2019 period which is identical to the terminal DUC trend provided in the initial plan (-2.0% p.a.) but slightly worse than the trend underpinning the (revised) SES average TANS DUC trend (−2.6% p.a.).

However, due to the 2014 actual inflation update, Italy cumulated and combined TANS DCs for TCZ1 and TCZ2 increase by some +2.1 M€2009 over RP2.

There are no other changes recorded as compared to the initial plan: the trends therefore remain identical for the DCs and DUC over RP2 for the combined TANS DC and for each individual TCZ as well.

It is noted that the aggregated level of TANS DCs in 2015 for Italy TCZs is some +9% higher than the reported 2014 actual level.

4. Terminal cost of capital:

Original assessment





No changes in relation to terminal cost of capital were provided in the revised plan.

Overall view of Italy terminal ANS cost-efficiency KPIs


Key points of the analysis of the revised RP2 TANS cost-efficiency targets submitted by Italy:

No changes were provided in the RP2 performance plan for the terminal traffic forecast assumptions, economic assumptions, DUC trend or cost of capital.

Compared to the initial plan (June 2014), and due to the 2014 actual inflation update, Italy’s DCs are slightly revised upwards in real terms for each year of RP2 (around +0.4% on average over RP2).

Italy’s terminal DUC is expected to decrease on average by -2.0% p.a. over the 2015-2019 period which is identical to the terminal DUC trend provided in the initial plan but slightly worse than the trend underpinning the (revised) SES average TANS DUC trend (-2.6% p.a.).


21

Annex 1: En-route Capacity considerations In preparation for the PRB to present conclusions to the Commission, the PRB reviewed any additional information that was submitted beyond the FAB performance plan. As previously referred to in 3.3 of the main report, more information on the considerations of the PRB can be found in this annex.

LEGISLATION Regulation (EC) 549/2009 Article 11.3c states:

(c) The consistency of the national or functional airspace block targets with the Community-wide performance targets shall be assessed by the Commission using the assessment criteria referred to in point (d) of paragraph 6. In the event that the Commission identifies that one or more national or functional airspace block targets do not meet the assessment criteria, it may decide, in accordance with the advisory procedure referred to in Article 5(2), to issue a recommendation that the national supervisory authorities concerned propose revised performance target(s). The Member State(s) concerned shall adopt revised performance targets and appropriate measures which shall be notified to the Commission in due time. Where the Commission finds that the revised performance targets and appropriate measures are not adequate, it may decide, in accordance with the regulatory procedure referred to in Article 5(3), that the Member States concerned shall take corrective measures.

Alternatively, the Commission may decide, with adequate supporting evidence, to revise the Community-wide performance targets in accordance with the regulatory procedure referred to in Article 5(3).

Regulation (EU) 390/2013 Articles 14.3 & 14.4 state:

3. Where the Commission finds that a performance plan, or part thereof, and some or all of its target(s) are not consistent with the Union-wide targets and are not contributing adequately to them and/or are not consistent with one or more of the criteria laid down in Annex IV, it shall, within five months after reception of the performance plan and in accordance with the procedure established in Article 5(2) of Regulation (EC) No 549/2004, issue a recommendation to the Member State(s) concerned to adopt a revised performance plan, or part thereof, and/or target(s). This recommendation shall be made after consultation of the Member State(s) concerned, and shall identify precisely which parts of the performance plan and/or target(s) are to be revised as well as explaining the rationale of the Commission’s assessment.

4. In such case, the Member State(s) concerned shall adopt a revised performance plan, or part thereof, and/or target(s), taking account of the Commission’s views, together with the appropriate measures for reaching those targets and shall notify the Commission accordingly within four months after the notification of the recommendation.

In accordance with Article 14.4, Member States that are requested to revise their performance plans are obliged to revise the relevant targets and to notify the Commission of the appropriate measures taken to ensure that the revised targets will be reached.

REVISION OF EN-ROUTE CAPACITY TARGETS Notwithstanding the recommendation of the Commission, the revised Blue Med performance plan did not contain revised capacity targets. The Blue Med RP2 en-route capacity targets remain inconsistent with the union-wide targets for each year of RP2.


22

APPROPRIATE MEASURES FOR REACHING IMPROVED EN-ROUTE CAPACITY TARGETS New information on additional capacity enhancement measures in the revised performance plan includes Greece planning on upgrading/ replacing its ATM system from 2016, and Cyprus hiring and training additional ATCOs in the Nicosia ACC (7 ATCOs by the end of 2015, 6 more by summer 2016 and a further 6 by the end of 2016.)

[Comment: It is unclear if the dates provided for additional ATCOs in Cyprus refer to the date of initial hiring or to the date that they will be operational and providing ATC service, which could be significantly later. Furthermore, the updated ANSP capacity plans contained in NOP 2015-2019 do not refer to the same intake of new ATCOs. They refer to 6 additional ATCOs in 2016 and 5 additional ATCOs in 2018- a difference of 8 ATCOs and a slippage of up to 2 years.]

ADDITIONAL INFORMATION No supplementary information was provided to the PRU.

NETWORK OPERATIONS PLAN: CAPACITY PLANS Annex 5 of the Network Operations Plan “ACC Traffic Forecast & Capacity Plans” compiles the “Planned capacity enhancement measures” as described by the local ANSP to the Network Manager over the medium-term planning period (approx. 5 years).

Comparison of the NOP 2014-2018/2019 (June 2014 edition) with the NOP 2015-2019 (May 2015 edition) reveals that the only additional capacity enhancement measures planned for the Blue Med ACCs, in response to the recommendation of the Commission are: ATM system upgrade in Greece and opening of 5th & 6th sectors in Cyprus being brought forward from 2016 & 2018 to 2015 and 2016/2017 respectively. Neither Malta nor Italy has planned any additional capacity enhancement measures.

REMEDIAL MEASURES In Section 10.2 of the Network Operations Plan, the Network Manager has identified several reasons for capacity constraints at three ACCs within the Blue Med area: Athens, Makedonia and Nicosia ACC. Furthermore, the Network Manager has suggested remedial actions that, if implemented, could significantly improve capacity performance at those ACCs.

CYPRUS–NICOSIAACCReasons for lack of capacity

Inflexible use of staff Delayed implementation of new ATM system Low sector capacities Lack of flexibility in sector configurations Lack of flexibility in opening scheme Failure to fully implement capacity enhancement measures planned in the capacity

plan Proposed NM measures

Implementation of re-sectorisation proposals Sector capacities re-evaluations following the CAPAN study performed in 2013 Flexible rostering allowing better alignment between traffic demand and sector

opening times Flexible configurations opening, according to the traffic flows Improved ATFCM techniques Implementation of a new ATM system.

Cyprus DCA confirmed measures: Implementation of re-sectorization proposals Sector capacities re-evaluations following the CAPAN study performed in 2013


23

Flexible rostering allowing better alignment between traffic demand and sector opening times

Roster flexibility is one of the expected benefits of the corporatization effort Flexible configurations opening, according to the traffic flows To be achieved with flexible rostering Improved ATFCM techniques Implementation of a new ATM system New functionalities planned Creation of a corporatised ANSP

NM assessment No additional measures have been confirmed by Cyprus DCA. It is expected that the current work undertaken by NM and the Cyprus authorities, when implemented, will deliver the required increase in capacity

GREECE–ATHENSACCReasons for lack of capacity

Economic and social problems resulting in: Lack of investments in ATC Lack of ATCO recruitment

Proposed NM measures Addressing social and economic aspects, including separation between the regulator

and ANSP to allow development and implementation of operational plans and staff recruitment.

HCAA confirmed measures: Discussions are continuing with the HCAA.

NM assessment Discussions are continuing with the HCAA

GREECE–MAKEDONIAACCReasons for lack of capacity

Economic and social problems resulting in: Lack of investments in ATC Lack of ATCO recruitment

Proposed NM measures Addressing social and economic aspects, including separation between regulator and

ANSP to allow development and implementation of operational plans and staff recruitment.

HCAA confirmed measures: Discussions are continuing with the HCAA

NM assessment Discussions are continuing with the HCAA

[Comment: The Network Manager highlights inflexibility in use of staff; inflexibility in sector configurations and inflexibility in opening scheme as drivers for lack of capacity in Cyprus, rather than a shortage of ATCOs. Although Cyprus DCA has confirmed that measures are needed to improve flexibility, it has not presented any timeframe for doing so.]

[Comment: The Network Manager has not identified problems with the current ATM system as being a driver for lack of capacity in Greece.]

[Comment: No remedial measures have been suggested for the other Blue Med ACCs since they are not identified, by the Network Manager, as presenting capacity bottlenecks for the network, in RP2.


24

OTHER CONSIDERATIONS Blue Med FAB Incentive scheme for en route capacity

BLUE MED FAB did not present a FAB-wide incentive scheme for en-route capacity performance.

Malta stated that it is not applying an incentive scheme for en-route capacity.

Greece provided no information in regards to an incentive scheme.

Cyprus states that it is applying an incentive scheme with penalties/bonus within 1% of ATS turnover. It does not provide any information on the working of the incentive scheme so it cannot be determined if it is compliant with the SES legislation.

Italy has submitted on an en-route capacity incentive scheme:

Incentive Scheme on En route ATFM delay per flight

The Incentive Scheme on en route is mainly based on the scheme already used in RP1 with adaptations related to the different legal and operational environment. The incentive scheme:

1. relates to the Capacity KPI “The average minutes of en route ATFM delay per flight”

2. takes into consideration the reference values provided by NM and PRB as adequate contribution (based on NOP, LSSIP Italy, Capacity Plans), specifically: 0,09 min/flight in 2015; 0,10 min/flight in 2016; 0,11 min/flight for the years 2017 to 2019 included

3. is symmetrical and incremental 4. takes into account all en-route ATFM delay causes excluding exceptional

events 5. has a maximum level at 1% of the revenue from en route ANS

6. is proportional to the operational and economic effects on Airspace Users.

The calculation of the incentive (bonus or penalty) is based on the costs of ATFM delay for Airspace Users in a gate-to-gate perspective. This calculation takes into consideration the


25

average over the RP of projected minutes of ATFM delay for each year of RP2 multiplied by €87 (University of Westminster - “European airline delay cost reference values” – ACE 2013) and allocating half of the economic effect to ENAV as a bonus, in case of over-performance, or as a penalty, in case of under-performance.

The calculation provides for an economic value of more than 1,6 mln € each 0,01 min/flight (average en-route ATFM delay per en-route flight) that is translated into a rounded figure of 815.000 € bonus/penalty, each 0,01 min/flight result, for ENAV. The calculation will be performed at the end of each year of RP2, based on the actual performance results and with a maximum of 1% of revenues from en route ANS.

[Comment: The incentive scheme refers to reference values provided by NM and PRB to determine adequate contribution. However, the only official reference values for RP2 are as published at FAB level. There are no official ‘reference values’ published at State level in RP2.]

[Comment: Since it is based upon a local indicative value, it is impossible to determine if it fosters high performance, and if it is therefore compliant with the SES legislation. ]

ACTUAL CAPACITY PERFORMANCE DURING RP1

CYPRUS

Minutes of ATFM en-route delay

2012 2013 2014 Observations

Reference value

0.93 0.59 0.3

National Target 1.9 1.7 1.0

Actual performance

1.59 2.16 1.91

[Comment: Cyprus has experienced significant capacity problems every year since 2007, and has consistently failed to resolve them. RP1 did not see any improvement in en route capacity performance.]

GREECE



Reference value

0.37 0.32 0.26

National Target

1.1 1 0.95

Actual performance

0.15 0.06 0.41


26

[Comment: Greece easily surpassed both the national target, and the reference value for the years 2012 and 2013. In 2014, capacity performance surpassed the national target but was not sufficient to meet the respective reference value. The PRB annual monitoring report for 2013 commented on the variation between the national targets and actual performance.]

ITALY



Reference value 0.14 0.14 0.12

National Target 0.14 0.14 0.12

Actual performance

0 0 0.02

[Comment: Italy delivered excellent en-route capacity performance during RP1, easily surpassing the national targets.]

MALTA



Reference value

0.02 0.03 0.05

National Target

0.02 0.03 0.05

Actual performance

0 0 0

[Comment: Malta delivered excellent en-route capacity performance over RP1 with zero delay for airspace users.]


27

CAPACITY PLANNING IN BLUE MED ACCS

[Comment: Nicosia ACC has consistently postponed and downgraded planned capacity enhancements: with the result that the Network Manager expects significant capacity problems for the duration of RP2, unless the capacity constraints are addressed satisfactorily.]

[Comment: The planned decrease in capacity coupled with the increasing traffic led the Network Manager to flag concerns over capacity problems for the duration of RP2.]

40

60

80

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019

RP1 Reference RP2 Reference

Nicosia ACC

90

110

130

150

2010 2011 2012 2013 2014 2015 2016 2017 2018 20192010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Athens ACC


28

[Comment: The planned decrease in capacity coupled with the increasing traffic led the Network Manager to flag concerns over capacity problems for the duration of RP2.]

[Comment: A national reorganisation between ACCs resulted in a ‘capacity drop’ in 2013. However, consistent capacity planning leads the Network Manager to expect no capacity problems in Brindisi ACC during RP2.]

70

90

110

130

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Makedonia ACC

60

70

80

90

100

110

120

130

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019

RP1 Reference RP2 reference

Brindisi ACC


29

[Comment: A national reorganisation between ACCs resulted in a ‘capacity jump’ in 2013. Consistent capacity planning leads the Network Manager to expect no capacity problems in Milan ACC during RP2.]

[Comment: Consistent capacity planning leads the Network Manager to expect no capacity problems in Padua ACC during RP2.]

150

170

190

210

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Milan ACC

160

180

200

220

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Padua ACC


30

[Comment: A national reorganisation between ACCs resulted in a ‘capacity drop’ in 2013. However, consistent capacity planning leads the Network Manager to expect no capacity problems in Rome ACC during RP2.]

MALTA ACC

[Comment: The Network Manager states that Malta ACC has sufficient capacity to cope with expected demand during RP2.]

170

190

210

230

250

270

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

2010‐2014 2011‐2015 2012‐2016

2013‐2017 2014‐2019 2015‐2019


Rome ACC


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Blue Med OVERALL

[Comment: Blue Med ACCs range from capacity surpluses to severe capacity constraints. Although, nominally a FAB entity, airspace users do not appear to be getting any benefit as the various ANSPs are not pooling resources to improve overall FAB operations.]

DOCUMENTS USED FOR CAPACITY ANALYSIS: 2013 SES performance scheme Annual Monitoring Report 2014 SES performance scheme Annual Monitoring Report (draft) Blue Med RP2 performance plan; Blue Med revised performance plan; Network Operations plan 2014-2018/2019, June 2014 edition; Network Operations plan 2015-2019, June 2015 edition; PRC Performance Review Report 2007. Regulation (EC) 549/2004 Regulation (EU) 390/2013


32

References i COMMISSION IMPLEMENTING REGULATION (EU) No 390/2013 of 3 May 2013 laying down a performance scheme for air navigation services and network functions ii COMMISSION IMPLEMENTING DECISION (EU) 2015/347 of 2 March 2015 concerning the inconsistency of certain targets included in the national or functional airspace block plans submitted pursuant to Regulation (EC) No 549/2004 of the European Parliament and of the Council with the Union-wide performance targets for the second reference period and setting out recommendations for the revision of those targets (notified under document C(2015) 1263) iii It is noted that Italy provided a corrected value for the 2011 actual costs (625.2 M€ instead of 599.1

M€ in nominal terms) with the following note: ”Please note that total determined costs for 2011 have been adjusted in order to reflect the correct actual amount.(…)”. This value is considered in the trend analysis and will be reconfirmed through the ongoing data validation process with Italy.

prb assessment of rp2 fab revised performance...

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