“The risk-sharing financial mechanism for ANSPs and airlines remains fair and equitable − despite the pandemic” – FAB CE ANSPs

FAB CE air navigation service providers (ANSPs) are urging other European air traffic management (ATM) stakeholders to continue with the revenue and risk-sharing mechanism agreed for reporting period three (RP3) – suitably amended to take account of revenue losses as a result of the COVID-19 pandemic.

“The risk-sharing mechanism has been designed to ensure that airspace users and ANSPs equitably share the risks and rewards from ATM investment and operations,” said Matej Eljon, FAB CE Programme Manager and Director of FAB CE Aviation Ltd. “Those ANSPs who take a minimum responsibility for risk have to return majority of their gains above expected income to airspace users. If there is more traffic than planned, ANSPs can keep up to 4.4% of additional revenue, while the remaining portion of up to 95.6% of traffic above planned should be reimbursed to users in two years. Losses are shared in the same ratio. In recent years, up until 2020, FAB CE ANSPs have generally reported better-than-expected income levels which has meant that airspace users have overall benefitted substantially from this arrangement.”

Nevertheless, the regulation changed in 2020 due to the pandemic, which essentially led to temporarily abandoning the traffic-risk sharing mechanism, with exceptional measures being applied. Regulatory changes coupled with a traffic decrease significantly deteriorated the ANSPs’ financial strength.

The exceptional measures applied to take account of the revenue gap in 2020 and 2021 envisage airspace users to partially cover the shortfall in ATM revenues over a period between five to seven years. “When traffic is fully recovered this shortfall will be added to future air navigation service charges,” said Matej Eljon,” but this will be at a minimum level as it will be distributed over a number of years − so it will have controlled impact on the long-term costs of our airline customers.”  

The abovementioned statements should also be considered in the ongoing process of EU-wide target setting and mitigation of negative financial COVID-19 consequences as well as related future capacity requirements.