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Air Navigation Service Provision: The Contestability Assessment

This page sets out the work of the CAA, at the request of the Department for Transport, to assess the contestability of the market in provision of ANSP terminal services in the UK.

Reference: Commission Regulation (EC) No 1794/2006 that lays down a common charging scheme for air navigation services

The CAA, at the request of the Department for Transport, has begun a review of the contestability of ANSP terminal services in the UK. For more information please contact thomas.carr@caa.co.uk

Download a copy of the Department's request for the study.

Extention to submission date from the Department for Transport

Background

The above Charging Regulation establishes a common charging scheme for air navigation services, both en-route and at aerodromes.  This aims to contribute towards greater transparency around the determination, imposition and enforcement of charges across the Single European Sky.  The Common Charging Regulation sits beneath the Service Provision Regulation, one of the four key regulations establishing Single European Sky along with the Framework Regulation, and those on Airspace and Interoperability.

For terminal navigation, the regulation stipulates that ANSPs at airports with more than 150,000 commercial air transport movements (ATMs) per year must comply with the full provisions of the Regulation and set unit rates and disclose information accordingly.  ANSP services provided at airports below 50,000 commercial ATMs per year can be exempted from the Regulation and the UK has confirmed in writing to the Commission its intention to do this.  The UK applies these regulations to terminal charges for airports above 150,000 commercial ATMs.

For services provided at airports above 50,000 and below 150,000 commercial ATMs per year, Member States can remove the relevant ANSP from having to comply with the full requirements after having first carried out a Contestability Assessment, demonstrating that those providers operate in a contestable market and that a greater degree of information provision would therefore not be appropriate.  Where contestability is established (through meeting a series of conditions detailed in Annex I to the Regulation) the relevant ANSPs only need provide more limited, higher-level, information. This could currently apply to up to 9 airports in the UK. If contestability is not established then the ANSP would need to comply with the full provisions of the Regulation. The UK wrote to the Commission stating its intention to take up the option of carrying out a Contestability Assessment. The Department for Transport requested that the CAA take forward the Assessment and the CAA agreed to do this. The CAA completed the Assessment, delivered it to the DfT in January 2008, and the DfT consulted formally on the CAA findings as part of its consultation on applying Commission Regulation (EC) No 1794/2006.  This consultation, which closed on 13 October 2008 can be viewed on the DfT's website. As a result of the Assessment the UK has decided to apply the reduced regulatory requirements permitted in the Charging Regulation in respect of terminal charges at airports between the thresholds of 50,000 commercial ATMs per year and 150,000 per year.

Methodology

Annex 1 of the Regulation sets out a clear framework to follow in order to carry out the Contestability Assessment.  It sets out four high-level questions, with sub-questions below each.  The four high-level questions to assess are the extent to which:

  • ANSPs can freely offer to provide or withdraw from ANS provision at airports;
  • Airports can freely determine the provider of their ANS, including the option to self-supply;
  • There is a range of ANS providers from which airports can choose;
  • Airports are subject to commercial cost pressures or incentive-based regulation.

The Assessment consisted of a mix of both desk-based research, and the gathering of information directly from the industry (ANS providers and stakeholders) through a mix of bilateral meetings and a questionnaire.

Conclusions

Broadly the CAA discovered that the overall framework exists to support contestability:

  • Significant competitive pressures exist in the UK which incentivise airports to focus on costs and levels of service, including ANS provision. These pressures ensure that airports regularly review their ANS provision and consider the different options open to them.
  • The costs for an ANSP of either offering to provide (or withdraw) services are broadly proportionate to the value of the contract on offer.
  • ANS assets tend to be held either by airports or leasing companies, with provisions generally in place to transfer use of assets if the ANSP were to change. TUPE (Transfer of Undertakings Protection of Employment) legislation creates a clear framework for staff transfer.
  • Airports are free to change ANS provider, including moving from outsourcing to self-supply. Evidence also suggests that, even where an airport has had the same supplier for a significant period of time, they are likely to consider different options periodically.
  • Contracts are generally for periods of five to ten years (sometimes longer) but usually contain clear break points and review processes, enabling change in the event of unsatisfactory performance.
  • Recent changes to the EU regulatory framework should facilitate provision across EU boundaries in future.

The CAA presented the results of the Assessment at the DfT's Pre-consultation Workshop on Contestability and Terminal Charging Zones on 1 February 2007.  Download the CAAs Workshop slides.

The final Assessment can be downloaded here. Download the Contestability Assessment.