Air Traffic Management Financing
22044
From 2022 to 2023
The current financing model for air traffic management is vulnerable to external shocks, leading to the need to explore alternatives such as a fixed government contribution and risk-sharing adjustments. TML analysed different financing mechanisms and relied on interviews, literature studies, and simulations to promote transparency and efficiency in air traffic management financing.
The current funding model for air traffic management is very vulnerable to external shocks, such as the COVID-19 pandemic. In this study, we studied alternatives to the current model, also looking at other sectors for inspiration. We suggest a fixed government contribution or an adjustment to risk-sharing financing. In the longer term, consideration could be given to outsourcing air traffic management in order to increase competition in the market.
Rethinking the funding model seems all but inevitable after the past few years. While the basic principles are sound, funding suffers from a number of persistent problems. The first is a lack of incentives to cut costs and collaborate between providers. The second is the system's susceptibility to a large drop in air traffic, meaning critical services are underfunded during crises. The third is a lack of transparency in costs.
Two alternatives to the current system scored high in our analysis: the threshold funding model and an adaptation of the risk-sharing or crisis funding model. The first model sets a certain minimum service level that is directly funded by the government. The adaptation of the second model amounts to spreading the costs of the crisis better between the provider, commercial aviation, and the government.
Both alternatives have advantages and disadvantages but boil down to a transparent government co-financing of air traffic management. The impact of this measure partly depends on the source of the government contribution. It could come either from the general budget or from existing taxes on aviation. In the study, we assumed a contribution from the general budget.
We based our result on a set of extensive interviews, a literature review, and a simulation of alternatives. Different mechanisms were juxtaposed and compared with examples from other sectors and other countries. Each mechanism was scored according to fairness, resilience, efficiency, transparency, and flexibility. Here, experiences from previous projects such as ITACA and COMPAIR were critical.
